Correlation Between Nutranomics and Emergent Health

Can any of the company-specific risk be diversified away by investing in both Nutranomics and Emergent Health 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 Nutranomics and Emergent Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nutranomics and Emergent Health Corp, you can compare the effects of market volatilities on Nutranomics and Emergent Health 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 Nutranomics with a short position of Emergent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutranomics and Emergent Health.

Diversification Opportunities for Nutranomics and Emergent Health

-0.7

Correlation Coefficient

Nutranomics  Emergent Health

Excellent diversification

The 3 months correlation between Nutranomics and Emergent is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nutranomics and Emergent Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Health Corp and Nutranomics 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 Nutranomics are associated (or correlated) with Emergent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Health Corp has no effect on the direction of Nutranomics i.e., Nutranomics and Emergent Health go up and down completely randomly.

Pair Corralation between Nutranomics and Emergent Health

Given the investment horizon of 90 days Nutranomics is expected to generate 20.61 times more return on investment than Emergent Health. However, Nutranomics is 20.61 times more volatile than Emergent Health Corp. It trades about 0.17 of its potential returns per unit of risk. Emergent Health Corp is currently generating about 0.04 per unit of risk. If you would invest  0.00  in Nutranomics on September 12, 2024 and sell it today you would earn a total of  0.01  from holding Nutranomics or generate 9.223372036854776E16% return on investment over 90 days.

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

Nutranomics  vs.  Emergent Health Corp

Nutranomics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nutranomics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nutranomics showed solid returns over the last few months and may actually be approaching a breakup point.

Emergent Health Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Health Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Emergent Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nutranomics and Emergent Health

The main advantage of trading using opposite Nutranomics and Emergent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutranomics position performs unexpectedly, Emergent Health 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 Emergent Health will offset losses from the drop in Emergent Health's long position.

The idea behind Nutranomics and Emergent Health Corp 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.