Correlation Between Guardion Health and China SXT

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

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

Diversification Opportunities for Guardion Health and China SXT

0.06

Correlation Coefficient

Guardion Health  China SXT

Significant diversification

The 3 months correlation between Guardion and China is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and China SXT Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China SXT Pharmaceuticals and Guardion 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 Guardion Health Sciences are associated (or correlated) with China SXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China SXT Pharmaceuticals has no effect on the direction of Guardion Health i.e., Guardion Health and China SXT go up and down completely randomly.

Pair Corralation between Guardion Health and China SXT

Given the investment horizon of 90 days Guardion Health Sciences is expected to generate 0.74 times more return on investment than China SXT. However, Guardion Health Sciences is 1.35 times less risky than China SXT. It trades about 0.18 of its potential returns per unit of risk. China SXT Pharmaceuticals is currently generating about 0.13 per unit of risk. If you would invest  800.00  in Guardion Health Sciences on March 2, 2024 and sell it today you would earn a total of  125.00  from holding Guardion Health Sciences or generate 15.63% return on investment over 90 days.

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

Guardion Health Sciences  vs.  China SXT Pharmaceuticals

Guardion Health Sciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardion Health Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Guardion Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

China SXT Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China SXT Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Guardion Health and China SXT

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

The idea behind Guardion Health Sciences and China SXT Pharmaceuticals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.