Correlation Between Honest and Chembio Diagnostics

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Can any of the company-specific risk be diversified away by investing in both Honest and Chembio Diagnostics 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 Honest and Chembio Diagnostics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honest Company and Chembio Diagnostics, you can compare the effects of market volatilities on Honest and Chembio Diagnostics 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 Honest with a short position of Chembio Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and Chembio Diagnostics.

Diversification Opportunities for Honest and Chembio Diagnostics

0.11
  Correlation Coefficient

Average diversification

The 1 month correlation between Honest and Chembio is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and Chembio Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chembio Diagnostics and Honest 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 Honest Company are associated (or correlated) with Chembio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chembio Diagnostics has no effect on the direction of Honest i.e., Honest and Chembio Diagnostics go up and down completely randomly.

Pair Corralation between Honest and Chembio Diagnostics

Given the investment horizon of 90 days Honest Company is expected to under-perform the Chembio Diagnostics. But the stock apears to be less risky and, when comparing its historical volatility, Honest Company is 1.29 times less risky than Chembio Diagnostics. The stock trades about -0.11 of its potential returns per unit of risk. The Chembio Diagnostics is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Chembio Diagnostics on September 2, 2022 and sell it today you would lose (6.00)  from holding Chembio Diagnostics or give up 16.67% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Honest Company  vs.  Chembio Diagnostics

 Performance (%) 
       Timeline  
Honest Company 
Honest Performance
0 of 100
Over the last 90 days Honest Company 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Honest Price Channel

Chembio Diagnostics 
Chembio Performance
0 of 100
Over the last 90 days Chembio Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chembio Price Channel

Honest and Chembio Diagnostics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Honest and Chembio Diagnostics

The main advantage of trading using opposite Honest and Chembio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest position performs unexpectedly, Chembio Diagnostics 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 Chembio Diagnostics will offset losses from the drop in Chembio Diagnostics' long position.
Honest vs. Intel
The idea behind Honest Company and Chembio Diagnostics 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.
Chembio Diagnostics vs. HP Inc
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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