Correlation Between HanS Laser and Humanwell Healthcare

Can any of the company-specific risk be diversified away by investing in both HanS Laser 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 HanS Laser and Humanwell Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HanS Laser Tech and Humanwell Healthcare Group, you can compare the effects of market volatilities on HanS Laser 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 HanS Laser with a short position of Humanwell Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HanS Laser and Humanwell Healthcare.

Diversification Opportunities for HanS Laser and Humanwell Healthcare

0.89

Correlation Coefficient

HanS Laser  Humanwell Healthcare

Very poor diversification

The 3 months correlation between HanS and Humanwell is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding HanS Laser Tech and Humanwell Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humanwell Healthcare and HanS Laser 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 HanS Laser Tech 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 HanS Laser i.e., HanS Laser and Humanwell Healthcare go up and down completely randomly.

Pair Corralation between HanS Laser and Humanwell Healthcare

Assuming the 90 days trading horizon HanS Laser is expected to generate 1.14 times less return on investment than Humanwell Healthcare. In addition to that, HanS Laser is 1.21 times more volatile than Humanwell Healthcare Group. It trades about 0.21 of its total potential returns per unit of risk. Humanwell Healthcare Group is currently generating about 0.29 per unit of volatility. If you would invest  1,616  in Humanwell Healthcare Group on September 14, 2024 and sell it today you would earn a total of  910.00  from holding Humanwell Healthcare Group or generate 56.31% return on investment over 90 days.

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

HanS Laser Tech  vs.  Humanwell Healthcare Group

HanS Laser Tech

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HanS Laser Tech are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HanS Laser sustained solid returns over the last few months and may actually be approaching a breakup point.

Humanwell Healthcare

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Humanwell Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HanS Laser and Humanwell Healthcare

The main advantage of trading using opposite HanS Laser and Humanwell Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HanS Laser 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 HanS Laser Tech 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.