Correlation Between Dezhan HealthCare and Beijing Bewinner

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

By analyzing existing cross correlation between Dezhan HealthCare Co and Beijing Bewinner Communications, you can compare the effects of market volatilities on Dezhan HealthCare and Beijing Bewinner 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 Dezhan HealthCare with a short position of Beijing Bewinner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dezhan HealthCare and Beijing Bewinner.

Diversification Opportunities for Dezhan HealthCare and Beijing Bewinner

0.41

Correlation Coefficient

Dezhan HealthCare  Beijing Bewinner

Very weak diversification

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

Pair Corralation between Dezhan HealthCare and Beijing Bewinner

Assuming the 90 days trading horizon Dezhan HealthCare is expected to generate 1.28 times less return on investment than Beijing Bewinner. But when comparing it to its historical volatility, Dezhan HealthCare Co is 1.11 times less risky than Beijing Bewinner. It trades about 0.17 of its potential returns per unit of risk. Beijing Bewinner Communications is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  457.00  in Beijing Bewinner Communications on September 4, 2024 and sell it today you would earn a total of  188.00  from holding Beijing Bewinner Communications or generate 41.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Dezhan HealthCare Co  vs.  Beijing Bewinner Communication

Dezhan HealthCare

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dezhan HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing Bewinner Com

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Bewinner Communications are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Bewinner sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dezhan HealthCare and Beijing Bewinner

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

The idea behind Dezhan HealthCare Co and Beijing Bewinner Communications 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.