Correlation Between Meinian Onehealth and Zhengping RoadBridge

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

Diversification Opportunities for Meinian Onehealth and Zhengping RoadBridge

0.53

Correlation Coefficient

Meinian Onehealth  Zhengping RoadBridge

Very weak diversification

The 3 months correlation between Meinian and Zhengping is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Meinian Onehealth Healthcare and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge 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 Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of Meinian Onehealth i.e., Meinian Onehealth and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between Meinian Onehealth and Zhengping RoadBridge

Assuming the 90 days trading horizon Meinian Onehealth Healthcare is expected to under-perform the Zhengping RoadBridge. But the stock apears to be less risky and, when comparing its historical volatility, Meinian Onehealth Healthcare is 1.52 times less risky than Zhengping RoadBridge. The stock trades about -0.03 of its potential returns per unit of risk. The Zhengping RoadBridge Constr is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  436.00  in Zhengping RoadBridge Constr on October 11, 2024 and sell it today you would lose (67.00) from holding Zhengping RoadBridge Constr or give up 15.37% of portfolio value over 90 days.

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

Meinian Onehealth Healthcare  vs.  Zhengping RoadBridge Constr

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.

Zhengping RoadBridge

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengping RoadBridge Constr are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengping RoadBridge sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meinian Onehealth and Zhengping RoadBridge

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

The idea behind Meinian Onehealth Healthcare and Zhengping RoadBridge Constr 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.