Correlation Between China Reform and Unisplendour Corp

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

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

Diversification Opportunities for China Reform and Unisplendour Corp

0.1

Correlation Coefficient

China Reform  Unisplendour Corp

Average diversification

The 3 months correlation between China and Unisplendour is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding China Reform Health and Unisplendour Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisplendour Corp and China Reform 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 China Reform Health are associated (or correlated) with Unisplendour Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisplendour Corp has no effect on the direction of China Reform i.e., China Reform and Unisplendour Corp go up and down completely randomly.

Pair Corralation between China Reform and Unisplendour Corp

Assuming the 90 days trading horizon China Reform Health is expected to under-perform the Unisplendour Corp. But the stock apears to be less risky and, when comparing its historical volatility, China Reform Health is 1.4 times less risky than Unisplendour Corp. The stock trades about -0.5 of its potential returns per unit of risk. The Unisplendour Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,514  in Unisplendour Corp on October 12, 2024 and sell it today you would earn a total of  60.00  from holding Unisplendour Corp or generate 2.39% return on investment over 90 days.

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

China Reform Health  vs.  Unisplendour Corp

China Reform Health

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days China Reform Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Reform is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Unisplendour Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unisplendour Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unisplendour Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with China Reform and Unisplendour Corp

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

The idea behind China Reform Health and Unisplendour Corp 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.