Correlation Between Dezhan HealthCare and Qiaoyin Environmental

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

Diversification Opportunities for Dezhan HealthCare and Qiaoyin Environmental

0.23

Correlation Coefficient

Dezhan HealthCare  Qiaoyin Environmental

Modest diversification

The 3 months correlation between Dezhan and Qiaoyin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dezhan HealthCare Co and Qiaoyin Environmental Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiaoyin Environmental 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 Qiaoyin Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiaoyin Environmental has no effect on the direction of Dezhan HealthCare i.e., Dezhan HealthCare and Qiaoyin Environmental go up and down completely randomly.

Pair Corralation between Dezhan HealthCare and Qiaoyin Environmental

Assuming the 90 days trading horizon Dezhan HealthCare is expected to generate 5.69 times less return on investment than Qiaoyin Environmental. In addition to that, Dezhan HealthCare is 1.08 times more volatile than Qiaoyin Environmental Tech. It trades about 0.02 of its total potential returns per unit of risk. Qiaoyin Environmental Tech is currently generating about 0.14 per unit of volatility. If you would invest  1,037  in Qiaoyin Environmental Tech on December 25, 2024 and sell it today you would earn a total of  216.00  from holding Qiaoyin Environmental Tech or generate 20.83% 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.  Qiaoyin Environmental Tech

Dezhan HealthCare

Risk-Adjusted Performance

Weak

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

Qiaoyin Environmental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qiaoyin Environmental Tech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qiaoyin Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dezhan HealthCare and Qiaoyin Environmental

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

The idea behind Dezhan HealthCare Co and Qiaoyin Environmental Tech 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.