Correlation Between Dezhan HealthCare and APT Medical

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

Diversification Opportunities for Dezhan HealthCare and APT Medical

0.12

Correlation Coefficient

Dezhan HealthCare  APT Medical

Average diversification

The 3 months correlation between Dezhan and APT is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dezhan HealthCare Co and APT Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Medical 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 APT Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Medical has no effect on the direction of Dezhan HealthCare i.e., Dezhan HealthCare and APT Medical go up and down completely randomly.

Pair Corralation between Dezhan HealthCare and APT Medical

Assuming the 90 days trading horizon Dezhan HealthCare Co is expected to generate 1.79 times more return on investment than APT Medical. However, Dezhan HealthCare is 1.79 times more volatile than APT Medical. It trades about 0.05 of its potential returns per unit of risk. APT Medical is currently generating about 0.01 per unit of risk. If you would invest  289.00  in Dezhan HealthCare Co on October 23, 2024 and sell it today you would earn a total of  24.00  from holding Dezhan HealthCare Co or generate 8.3% return on investment over 90 days.

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

Dezhan HealthCare Co  vs.  APT Medical

Dezhan HealthCare

Risk-Adjusted Performance

3 of 100

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.

APT Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APT Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APT Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dezhan HealthCare and APT Medical

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

The idea behind Dezhan HealthCare Co and APT Medical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.