Correlation Between Guangzhou KingTeller and Innovative Medical

Can any of the company-specific risk be diversified away by investing in both Guangzhou KingTeller and Innovative Medical 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 Guangzhou KingTeller and Innovative Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangzhou KingTeller Technology and Innovative Medical Management, you can compare the effects of market volatilities on Guangzhou KingTeller and Innovative Medical 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 Guangzhou KingTeller with a short position of Innovative Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou KingTeller and Innovative Medical.

Diversification Opportunities for Guangzhou KingTeller and Innovative Medical

0.74

Correlation Coefficient

Guangzhou KingTeller  Innovative Medical

Poor diversification

The 3 months correlation between Guangzhou and Innovative is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KingTeller Technolog and Innovative Medical Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Medical and Guangzhou KingTeller 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 Guangzhou KingTeller Technology are associated (or correlated) with Innovative Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Medical has no effect on the direction of Guangzhou KingTeller i.e., Guangzhou KingTeller and Innovative Medical go up and down completely randomly.

Pair Corralation between Guangzhou KingTeller and Innovative Medical

Assuming the 90 days trading horizon Guangzhou KingTeller Technology is expected to under-perform the Innovative Medical. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou KingTeller Technology is 1.18 times less risky than Innovative Medical. The stock trades about -0.36 of its potential returns per unit of risk. The Innovative Medical Management is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  957.00  in Innovative Medical Management on October 12, 2024 and sell it today you would lose (81.00) from holding Innovative Medical Management or give up 8.46% of portfolio value over 90 days.

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

Guangzhou KingTeller Technolog  vs.  Innovative Medical Management

Guangzhou KingTeller

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou KingTeller Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou KingTeller sustained solid returns over the last few months and may actually be approaching a breakup point.

Innovative Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Medical Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innovative Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangzhou KingTeller and Innovative Medical

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

The idea behind Guangzhou KingTeller Technology and Innovative Medical Management 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.