Correlation Between Shenzhen Glory and Dezhan HealthCare

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

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

Diversification Opportunities for Shenzhen Glory and Dezhan HealthCare

0.81

Correlation Coefficient

Shenzhen Glory  Dezhan HealthCare

Very poor diversification

The 3 months correlation between Shenzhen and Dezhan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Glory Medical and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare and Shenzhen Glory 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 Shenzhen Glory Medical are associated (or correlated) with Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of Shenzhen Glory i.e., Shenzhen Glory and Dezhan HealthCare go up and down completely randomly.

Pair Corralation between Shenzhen Glory and Dezhan HealthCare

Assuming the 90 days trading horizon Shenzhen Glory Medical is expected to under-perform the Dezhan HealthCare. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Glory Medical is 1.12 times less risky than Dezhan HealthCare. The stock trades about -0.01 of its potential returns per unit of risk. The Dezhan HealthCare Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  291.00  in Dezhan HealthCare Co on October 4, 2024 and sell it today you would earn a total of  22.00  from holding Dezhan HealthCare Co or generate 7.56% return on investment over 90 days.

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

Shenzhen Glory Medical  vs.  Dezhan HealthCare Co

Shenzhen Glory Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dezhan HealthCare

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Shenzhen Glory and Dezhan HealthCare

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

The idea behind Shenzhen Glory Medical and Dezhan HealthCare 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.