Correlation Between Element Global and Health

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

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

Diversification Opportunities for Element Global and Health

-0.86

Correlation Coefficient

Element Global  Health

Pay attention - limited upside

The 3 months correlation between Element and Health is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Element Global and Health and Happiness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health and Happiness and Element Global 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 Element Global are associated (or correlated) with Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health and Happiness has no effect on the direction of Element Global i.e., Element Global and Health go up and down completely randomly.

Pair Corralation between Element Global and Health

Given the investment horizon of 90 days Element Global is expected to generate 28.68 times more return on investment than Health. However, Element Global is 28.68 times more volatile than Health and Happiness. It trades about 0.07 of its potential returns per unit of risk. Health and Happiness is currently generating about -0.01 per unit of risk. If you would invest  0.01  in Element Global on January 31, 2024 and sell it today you would earn a total of  0.00  from holding Element Global or generate 0.0% return on investment over 90 days.

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

Element Global  vs.  Health and Happiness

Element Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Element Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Health and Happiness

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Health and Happiness are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Element Global and Health

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

The idea behind Element Global and Health and Happiness 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.