Correlation Between Dezhan HealthCare and Sihui Fuji

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

Diversification Opportunities for Dezhan HealthCare and Sihui Fuji

0.55

Correlation Coefficient

Dezhan HealthCare  Sihui Fuji

Very weak diversification

The 3 months correlation between Dezhan and Sihui is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dezhan HealthCare Co and Sihui Fuji Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sihui Fuji Electronics 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 Sihui Fuji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sihui Fuji Electronics has no effect on the direction of Dezhan HealthCare i.e., Dezhan HealthCare and Sihui Fuji go up and down completely randomly.

Pair Corralation between Dezhan HealthCare and Sihui Fuji

Assuming the 90 days trading horizon Dezhan HealthCare is expected to generate 5.56 times less return on investment than Sihui Fuji. But when comparing it to its historical volatility, Dezhan HealthCare Co is 1.05 times less risky than Sihui Fuji. It trades about 0.0 of its potential returns per unit of risk. Sihui Fuji Electronics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,340  in Sihui Fuji Electronics on October 4, 2024 and sell it today you would earn a total of  282.00  from holding Sihui Fuji Electronics or generate 12.05% return on investment over 90 days.

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

Dezhan HealthCare Co  vs.  Sihui Fuji Electronics

Dezhan HealthCare

Risk-Adjusted Performance

1 of 100

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.

Sihui Fuji Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sihui Fuji Electronics 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.

Pair Trading with Dezhan HealthCare and Sihui Fuji

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

The idea behind Dezhan HealthCare Co and Sihui Fuji Electronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..