Correlation Between Dezhan HealthCare and Shanghai 2345

Can any of the company-specific risk be diversified away by investing in both Dezhan HealthCare and Shanghai 2345 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 Shanghai 2345 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 Shanghai 2345 Network, you can compare the effects of market volatilities on Dezhan HealthCare and Shanghai 2345 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 Shanghai 2345. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dezhan HealthCare and Shanghai 2345.

Diversification Opportunities for Dezhan HealthCare and Shanghai 2345

0.33

Correlation Coefficient

Dezhan HealthCare  Shanghai 2345

Weak diversification

The 3 months correlation between Dezhan and Shanghai is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dezhan HealthCare Co and Shanghai 2345 Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai 2345 Network 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 Shanghai 2345. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai 2345 Network has no effect on the direction of Dezhan HealthCare i.e., Dezhan HealthCare and Shanghai 2345 go up and down completely randomly.

Pair Corralation between Dezhan HealthCare and Shanghai 2345

Assuming the 90 days trading horizon Dezhan HealthCare is expected to generate 4.36 times less return on investment than Shanghai 2345. But when comparing it to its historical volatility, Dezhan HealthCare Co is 1.84 times less risky than Shanghai 2345. It trades about 0.12 of its potential returns per unit of risk. Shanghai 2345 Network is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Shanghai 2345 Network on December 10, 2024 and sell it today you would earn a total of  135.00  from holding Shanghai 2345 Network or generate 27.05% return on investment over 90 days.

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

Dezhan HealthCare Co  vs.  Shanghai 2345 Network

Dezhan HealthCare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dezhan HealthCare Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shanghai 2345 Network

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai 2345 Network are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai 2345 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dezhan HealthCare and Shanghai 2345

The main advantage of trading using opposite Dezhan HealthCare and Shanghai 2345 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dezhan HealthCare position performs unexpectedly, Shanghai 2345 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 Shanghai 2345 will offset losses from the drop in Shanghai 2345's long position.

The idea behind Dezhan HealthCare Co and Shanghai 2345 Network 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.