Correlation Between Andon Health and Jiangxi Selon

Can any of the company-specific risk be diversified away by investing in both Andon Health and Jiangxi Selon 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 Jiangxi Selon 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 Jiangxi Selon Industrial, you can compare the effects of market volatilities on Andon Health and Jiangxi Selon 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 Jiangxi Selon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andon Health and Jiangxi Selon.

Diversification Opportunities for Andon Health and Jiangxi Selon

-0.5

Correlation Coefficient

Andon Health  Jiangxi Selon

Very good diversification

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

Pair Corralation between Andon Health and Jiangxi Selon

Assuming the 90 days trading horizon Andon Health Co is expected to under-perform the Jiangxi Selon. In addition to that, Andon Health is 1.01 times more volatile than Jiangxi Selon Industrial. It trades about 0.0 of its total potential returns per unit of risk. Jiangxi Selon Industrial is currently generating about 0.01 per unit of volatility. If you would invest  794.00  in Jiangxi Selon Industrial on December 26, 2024 and sell it today you would lose (2.00) from holding Jiangxi Selon Industrial or give up 0.25% of portfolio value over 90 days.

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

Andon Health Co  vs.  Jiangxi Selon Industrial

Andon Health

Risk-Adjusted Performance

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.

Jiangxi Selon Industrial

Risk-Adjusted Performance

Insignificant

Over the last 90 days Jiangxi Selon Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiangxi Selon 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 Jiangxi Selon

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

The idea behind Andon Health Co and Jiangxi Selon Industrial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.