Correlation Between Hengkang Medical and Dymatic Chemicals

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

By analyzing existing cross correlation between Hengkang Medical Group and Dymatic Chemicals, you can compare the effects of market volatilities on Hengkang Medical and Dymatic Chemicals 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 Hengkang Medical with a short position of Dymatic Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengkang Medical and Dymatic Chemicals.

Diversification Opportunities for Hengkang Medical and Dymatic Chemicals

0.5

Correlation Coefficient

Hengkang Medical  Dymatic Chemicals

Very weak diversification

The 3 months correlation between Hengkang and Dymatic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hengkang Medical Group and Dymatic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dymatic Chemicals and Hengkang Medical 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 Hengkang Medical Group are associated (or correlated) with Dymatic Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dymatic Chemicals has no effect on the direction of Hengkang Medical i.e., Hengkang Medical and Dymatic Chemicals go up and down completely randomly.

Pair Corralation between Hengkang Medical and Dymatic Chemicals

Assuming the 90 days trading horizon Hengkang Medical is expected to generate 2.79 times less return on investment than Dymatic Chemicals. In addition to that, Hengkang Medical is 1.17 times more volatile than Dymatic Chemicals. It trades about 0.02 of its total potential returns per unit of risk. Dymatic Chemicals is currently generating about 0.06 per unit of volatility. If you would invest  512.00  in Dymatic Chemicals on October 15, 2024 and sell it today you would earn a total of  50.00  from holding Dymatic Chemicals or generate 9.77% return on investment over 90 days.

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

Hengkang Medical Group  vs.  Dymatic Chemicals

Hengkang Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hengkang Medical Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hengkang Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dymatic Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Hengkang Medical and Dymatic Chemicals

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

The idea behind Hengkang Medical Group and Dymatic Chemicals 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..