Correlation Between Ciwen Media and Chison Medical

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

By analyzing existing cross correlation between Ciwen Media Co and Chison Medical Technologies, you can compare the effects of market volatilities on Ciwen Media and Chison 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 Ciwen Media with a short position of Chison Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ciwen Media and Chison Medical.

Diversification Opportunities for Ciwen Media and Chison Medical

0.9

Correlation Coefficient

Ciwen Media  Chison Medical

Almost no diversification

The 3 months correlation between Ciwen and Chison is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ciwen Media Co and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn and Ciwen Media 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 Ciwen Media Co are associated (or correlated) with Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Ciwen Media i.e., Ciwen Media and Chison Medical go up and down completely randomly.

Pair Corralation between Ciwen Media and Chison Medical

Assuming the 90 days trading horizon Ciwen Media Co is expected to generate 0.91 times more return on investment than Chison Medical. However, Ciwen Media Co is 1.1 times less risky than Chison Medical. It trades about 0.2 of its potential returns per unit of risk. Chison Medical Technologies is currently generating about 0.12 per unit of risk. If you would invest  513.00  in Ciwen Media Co on September 5, 2024 and sell it today you would earn a total of  239.00  from holding Ciwen Media Co or generate 46.59% return on investment over 90 days.

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

Ciwen Media Co  vs.  Chison Medical Technologies

Ciwen Media

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ciwen Media Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ciwen Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Chison Medical Techn

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chison Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ciwen Media and Chison Medical

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

The idea behind Ciwen Media Co and Chison Medical Technologies 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.