Correlation Between Iron Road and Global Wholehealth

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

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

Diversification Opportunities for Iron Road and Global Wholehealth

0.0

Correlation Coefficient

Iron Road  Global Wholehealth

Pay attention - limited upside

The 3 months correlation between Iron and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road Limited and Global Wholehealth Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Wholehealth and Iron Road 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 Iron Road Limited are associated (or correlated) with Global Wholehealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Wholehealth has no effect on the direction of Iron Road i.e., Iron Road and Global Wholehealth go up and down completely randomly.

Pair Corralation between Iron Road and Global Wholehealth

If you would invest  0.01  in Global Wholehealth Partners on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Global Wholehealth Partners or generate 0.0% return on investment over 90 days.

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

Iron Road Limited  vs.  Global Wholehealth Partners

Iron Road Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Road Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Global Wholehealth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Wholehealth Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Global Wholehealth is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Iron Road and Global Wholehealth

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

The idea behind Iron Road Limited and Global Wholehealth Partners 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.