Correlation Between Natural Health and Beyond

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

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

Diversification Opportunities for Natural Health and Beyond

-0.41

Correlation Coefficient

Natural Health  Beyond

Very good diversification

The 3 months correlation between Natural and Beyond is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and Beyond Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Inc and Natural 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 Natural Health Trend are associated (or correlated) with Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Inc has no effect on the direction of Natural Health i.e., Natural Health and Beyond go up and down completely randomly.

Pair Corralation between Natural Health and Beyond

Given the investment horizon of 90 days Natural Health Trend is expected to generate 0.49 times more return on investment than Beyond. However, Natural Health Trend is 2.04 times less risky than Beyond. It trades about 0.13 of its potential returns per unit of risk. Beyond Inc is currently generating about -0.09 per unit of risk. If you would invest  606.00  in Natural Health Trend on February 9, 2024 and sell it today you would earn a total of  109.00  from holding Natural Health Trend or generate 17.99% return on investment over 90 days.

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

Natural Health Trend  vs.  Beyond Inc

Natural Health Trend

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Health Trend are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Natural Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Beyond Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Natural Health and Beyond

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

The idea behind Natural Health Trend and Beyond Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.