Correlation Between Chengdu Xingrong and Humanwell Healthcare

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

By analyzing existing cross correlation between Chengdu Xingrong Investment and Humanwell Healthcare Group, you can compare the effects of market volatilities on Chengdu Xingrong and Humanwell Healthcare 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 Chengdu Xingrong with a short position of Humanwell Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xingrong and Humanwell Healthcare.

Diversification Opportunities for Chengdu Xingrong and Humanwell Healthcare

0.08

Correlation Coefficient

Chengdu Xingrong  Humanwell Healthcare

Significant diversification

The 3 months correlation between Chengdu and Humanwell is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xingrong Investment and Humanwell Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humanwell Healthcare and Chengdu Xingrong 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 Chengdu Xingrong Investment are associated (or correlated) with Humanwell Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humanwell Healthcare has no effect on the direction of Chengdu Xingrong i.e., Chengdu Xingrong and Humanwell Healthcare go up and down completely randomly.

Pair Corralation between Chengdu Xingrong and Humanwell Healthcare

Assuming the 90 days trading horizon Chengdu Xingrong Investment is expected to under-perform the Humanwell Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Chengdu Xingrong Investment is 1.44 times less risky than Humanwell Healthcare. The stock trades about -0.07 of its potential returns per unit of risk. The Humanwell Healthcare Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,164  in Humanwell Healthcare Group on October 27, 2024 and sell it today you would earn a total of  25.00  from holding Humanwell Healthcare Group or generate 1.16% return on investment over 90 days.

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

Chengdu Xingrong Investment  vs.  Humanwell Healthcare Group

Chengdu Xingrong Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chengdu Xingrong Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Humanwell Healthcare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Humanwell Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chengdu Xingrong and Humanwell Healthcare

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

The idea behind Chengdu Xingrong Investment and Humanwell Healthcare Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.