Correlation Between GEM and Hangzhou Minsheng

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

By analyzing existing cross correlation between GEM Co and Hangzhou Minsheng Healthcare, you can compare the effects of market volatilities on GEM and Hangzhou Minsheng 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 GEM with a short position of Hangzhou Minsheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEM and Hangzhou Minsheng.

Diversification Opportunities for GEM and Hangzhou Minsheng

0.79

Correlation Coefficient

GEM  Hangzhou Minsheng

Poor diversification

The 3 months correlation between GEM and Hangzhou is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GEM Co and Hangzhou Minsheng Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Minsheng and GEM 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 GEM Co are associated (or correlated) with Hangzhou Minsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Minsheng has no effect on the direction of GEM i.e., GEM and Hangzhou Minsheng go up and down completely randomly.

Pair Corralation between GEM and Hangzhou Minsheng

Assuming the 90 days trading horizon GEM Co is expected to generate 0.81 times more return on investment than Hangzhou Minsheng. However, GEM Co is 1.23 times less risky than Hangzhou Minsheng. It trades about 0.01 of its potential returns per unit of risk. Hangzhou Minsheng Healthcare is currently generating about 0.0 per unit of risk. If you would invest  667.00  in GEM Co on December 24, 2024 and sell it today you would earn a total of  2.00  from holding GEM Co or generate 0.3% return on investment over 90 days.

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

GEM Co  vs.  Hangzhou Minsheng Healthcare

GEM Co

Risk-Adjusted Performance

Very Weak

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

Hangzhou Minsheng

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GEM and Hangzhou Minsheng

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

The idea behind GEM Co and Hangzhou Minsheng Healthcare 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.