Correlation Between Meinian Onehealth and Chongqing Road

Can any of the company-specific risk be diversified away by investing in both Meinian Onehealth and Chongqing Road 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 Meinian Onehealth and Chongqing Road into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Meinian Onehealth Healthcare and Chongqing Road Bridge, you can compare the effects of market volatilities on Meinian Onehealth and Chongqing Road 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 Meinian Onehealth with a short position of Chongqing Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meinian Onehealth and Chongqing Road.

Diversification Opportunities for Meinian Onehealth and Chongqing Road

0.56

Correlation Coefficient

Meinian Onehealth  Chongqing Road

Very weak diversification

The 3 months correlation between Meinian and Chongqing is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Meinian Onehealth Healthcare and Chongqing Road Bridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Road Bridge and Meinian Onehealth 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 Meinian Onehealth Healthcare are associated (or correlated) with Chongqing Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Road Bridge has no effect on the direction of Meinian Onehealth i.e., Meinian Onehealth and Chongqing Road go up and down completely randomly.

Pair Corralation between Meinian Onehealth and Chongqing Road

Assuming the 90 days trading horizon Meinian Onehealth Healthcare is expected to under-perform the Chongqing Road. But the stock apears to be less risky and, when comparing its historical volatility, Meinian Onehealth Healthcare is 1.3 times less risky than Chongqing Road. The stock trades about -0.03 of its potential returns per unit of risk. The Chongqing Road Bridge is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  487.00  in Chongqing Road Bridge on October 11, 2024 and sell it today you would earn a total of  33.00  from holding Chongqing Road Bridge or generate 6.78% return on investment over 90 days.

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

Meinian Onehealth Healthcare  vs.  Chongqing Road Bridge

Meinian Onehealth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Meinian Onehealth Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meinian Onehealth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chongqing Road Bridge

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Meinian Onehealth and Chongqing Road

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

The idea behind Meinian Onehealth Healthcare and Chongqing Road Bridge 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.