Correlation Between Dezhan HealthCare and Humanwell Healthcare

Can any of the company-specific risk be diversified away by investing in both Dezhan HealthCare 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 Dezhan HealthCare and Humanwell Healthcare 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 Humanwell Healthcare Group, you can compare the effects of market volatilities on Dezhan HealthCare 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 Dezhan HealthCare with a short position of Humanwell Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dezhan HealthCare and Humanwell Healthcare.

Diversification Opportunities for Dezhan HealthCare and Humanwell Healthcare

0.47

Correlation Coefficient

Dezhan HealthCare  Humanwell Healthcare

Very weak diversification

The 3 months correlation between Dezhan and Humanwell is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dezhan HealthCare Co and Humanwell Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humanwell Healthcare 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 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 Dezhan HealthCare i.e., Dezhan HealthCare and Humanwell Healthcare go up and down completely randomly.

Pair Corralation between Dezhan HealthCare and Humanwell Healthcare

Assuming the 90 days trading horizon Dezhan HealthCare Co is expected to generate 1.91 times more return on investment than Humanwell Healthcare. However, Dezhan HealthCare is 1.91 times more volatile than Humanwell Healthcare Group. It trades about 0.05 of its potential returns per unit of risk. Humanwell Healthcare Group is currently generating about -0.08 per unit of risk. If you would invest  319.00  in Dezhan HealthCare Co on November 29, 2024 and sell it today you would earn a total of  22.00  from holding Dezhan HealthCare Co or generate 6.9% 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.  Humanwell Healthcare Group

Dezhan HealthCare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 3 (%) 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.

Humanwell Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humanwell Healthcare Group 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 Humanwell Healthcare

The main advantage of trading using opposite Dezhan HealthCare and Humanwell Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dezhan HealthCare 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 Dezhan HealthCare Co 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.