Correlation Between China Resources and Andon Health

Can any of the company-specific risk be diversified away by investing in both China Resources and Andon Health 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 China Resources and Andon Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Resources Sanjiu and Andon Health Co, you can compare the effects of market volatilities on China Resources and Andon Health 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 China Resources with a short position of Andon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Andon Health.

Diversification Opportunities for China Resources and Andon Health

0.71

Correlation Coefficient

China Resources  Andon Health

Poor diversification

The 3 months correlation between China and Andon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Sanjiu and Andon Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andon Health and China Resources 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 China Resources Sanjiu are associated (or correlated) with Andon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andon Health has no effect on the direction of China Resources i.e., China Resources and Andon Health go up and down completely randomly.

Pair Corralation between China Resources and Andon Health

Assuming the 90 days trading horizon China Resources Sanjiu is expected to under-perform the Andon Health. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Sanjiu is 1.18 times less risky than Andon Health. The stock trades about -0.06 of its potential returns per unit of risk. The Andon Health Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  4,266  in Andon Health Co on October 24, 2024 and sell it today you would lose (270.00) from holding Andon Health Co or give up 6.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

China Resources Sanjiu  vs.  Andon Health Co

China Resources Sanjiu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Andon Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with China Resources and Andon Health

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

The idea behind China Resources Sanjiu and Andon Health Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.