Correlation Between Helmerich and Cumberland Pharmaceuticals

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

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

Diversification Opportunities for Helmerich and Cumberland Pharmaceuticals

-0.61

Correlation Coefficient

Helmerich  Cumberland Pharmaceuticals

Excellent diversification

The 3 months correlation between Helmerich and Cumberland is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Helmerich and Payne and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Helmerich 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 Helmerich and Payne are associated (or correlated) with Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Helmerich i.e., Helmerich and Cumberland Pharmaceuticals go up and down completely randomly.

Pair Corralation between Helmerich and Cumberland Pharmaceuticals

Allowing for the 90-day total investment horizon Helmerich and Payne is expected to generate 0.42 times more return on investment than Cumberland Pharmaceuticals. However, Helmerich and Payne is 2.41 times less risky than Cumberland Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.1 per unit of risk. If you would invest  3,852  in Helmerich and Payne on February 5, 2024 and sell it today you would lose (5.00) from holding Helmerich and Payne or give up 0.13% of portfolio value over 90 days.

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

Helmerich and Payne  vs.  Cumberland Pharmaceuticals

Helmerich and Payne

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helmerich and Payne are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Helmerich is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Cumberland Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cumberland Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Helmerich and Cumberland Pharmaceuticals

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

The idea behind Helmerich and Payne and Cumberland 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .