Correlation Between Andon Health and Guocheng Mining

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

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

Diversification Opportunities for Andon Health and Guocheng Mining

0.0

Correlation Coefficient

Andon Health  Guocheng Mining

Pay attention - limited upside

The 3 months correlation between Andon and Guocheng is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Andon Health Co and Guocheng Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guocheng Mining and Andon 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 Andon Health Co are associated (or correlated) with Guocheng Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guocheng Mining has no effect on the direction of Andon Health i.e., Andon Health and Guocheng Mining go up and down completely randomly.

Pair Corralation between Andon Health and Guocheng Mining

Assuming the 90 days trading horizon Andon Health Co is expected to generate 0.26 times more return on investment than Guocheng Mining. However, Andon Health Co is 3.84 times less risky than Guocheng Mining. It trades about -0.19 of its potential returns per unit of risk. Guocheng Mining Co is currently generating about -0.18 per unit of risk. If you would invest  4,253  in Andon Health Co on October 10, 2024 and sell it today you would lose (195.00) from holding Andon Health Co or give up 4.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Andon Health Co  vs.  Guocheng Mining Co

Andon Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guocheng Mining

Risk-Adjusted Performance

1 of 100

Very Weak

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

Pair Trading with Andon Health and Guocheng Mining

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

The idea behind Andon Health Co and Guocheng Mining Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.