Correlation Between Natural Health and UNITED URBAN

Can any of the company-specific risk be diversified away by investing in both Natural Health and UNITED URBAN at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Natural Health and UNITED URBAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Natural Health Trends and UNITED URBAN INV, you can compare the effects of market volatilities on Natural Health and UNITED URBAN and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Natural Health with a short position of UNITED URBAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and UNITED URBAN.

Diversification Opportunities for Natural Health and UNITED URBAN

0.27

Correlation Coefficient

Natural Health  UNITED URBAN

Modest diversification

The 3 months correlation between Natural and UNITED is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and UNITED URBAN INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED URBAN INV and Natural Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Natural Health Trends are associated (or correlated) with UNITED URBAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED URBAN INV has no effect on the direction of Natural Health i.e., Natural Health and UNITED URBAN go up and down completely randomly.

Pair Corralation between Natural Health and UNITED URBAN

Assuming the 90 days trading horizon Natural Health Trends is expected to generate 2.17 times more return on investment than UNITED URBAN. However, Natural Health is 2.17 times more volatile than UNITED URBAN INV. It trades about 0.01 of its potential returns per unit of risk. UNITED URBAN INV is currently generating about -0.04 per unit of risk. If you would invest  427.00  in Natural Health Trends on September 14, 2024 and sell it today you would lose (13.00) from holding Natural Health Trends or give up 3.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Natural Health Trends  vs.  UNITED URBAN INV

Natural Health Trends

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UNITED URBAN INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED URBAN INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Natural Health and UNITED URBAN

The main advantage of trading using opposite Natural Health and UNITED URBAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, UNITED URBAN can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in UNITED URBAN will offset losses from the drop in UNITED URBAN's long position.

The idea behind Natural Health Trends and UNITED URBAN INV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.