Correlation Between Everjoy Health and Shenzhen Noposion

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

By analyzing existing cross correlation between Everjoy Health Group and Shenzhen Noposion Agrochemicals, you can compare the effects of market volatilities on Everjoy Health and Shenzhen Noposion 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 Everjoy Health with a short position of Shenzhen Noposion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everjoy Health and Shenzhen Noposion.

Diversification Opportunities for Everjoy Health and Shenzhen Noposion

0.49

Correlation Coefficient

Everjoy Health  Shenzhen Noposion

Very weak diversification

The 3 months correlation between Everjoy and Shenzhen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Everjoy Health Group and Shenzhen Noposion Agrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Noposion and Everjoy Health 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 Everjoy Health Group are associated (or correlated) with Shenzhen Noposion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Noposion has no effect on the direction of Everjoy Health i.e., Everjoy Health and Shenzhen Noposion go up and down completely randomly.

Pair Corralation between Everjoy Health and Shenzhen Noposion

Assuming the 90 days trading horizon Everjoy Health is expected to generate 6.63 times less return on investment than Shenzhen Noposion. In addition to that, Everjoy Health is 1.29 times more volatile than Shenzhen Noposion Agrochemicals. It trades about 0.01 of its total potential returns per unit of risk. Shenzhen Noposion Agrochemicals is currently generating about 0.06 per unit of volatility. If you would invest  947.00  in Shenzhen Noposion Agrochemicals on October 25, 2024 and sell it today you would earn a total of  92.00  from holding Shenzhen Noposion Agrochemicals or generate 9.71% return on investment over 90 days.

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

Everjoy Health Group  vs.  Shenzhen Noposion Agrochemical

Everjoy Health Group

Risk-Adjusted Performance

0 of 100

Weak

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

Shenzhen Noposion

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Noposion Agrochemicals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Noposion may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Everjoy Health and Shenzhen Noposion

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

The idea behind Everjoy Health Group and Shenzhen Noposion Agrochemicals 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.