Correlation Between Shenzhen Zhongzhuang and Andon Health

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

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

Diversification Opportunities for Shenzhen Zhongzhuang and Andon Health

-0.15

Correlation Coefficient

Shenzhen Zhongzhuang  Andon Health

Good diversification

The 3 months correlation between Shenzhen and Andon is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Andon Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andon Health and Shenzhen Zhongzhuang 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 Zhongzhuang Construction are associated (or correlated) with Andon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andon Health has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Andon Health go up and down completely randomly.

Pair Corralation between Shenzhen Zhongzhuang and Andon Health

Assuming the 90 days trading horizon Shenzhen Zhongzhuang Construction is expected to generate 1.49 times more return on investment than Andon Health. However, Shenzhen Zhongzhuang is 1.49 times more volatile than Andon Health Co. It trades about 0.01 of its potential returns per unit of risk. Andon Health Co is currently generating about 0.0 per unit of risk. If you would invest  456.00  in Shenzhen Zhongzhuang Construction on October 4, 2024 and sell it today you would lose (50.00) from holding Shenzhen Zhongzhuang Construction or give up 10.96% of portfolio value over 90 days.

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

Shenzhen Zhongzhuang Construct  vs.  Andon Health Co

Shenzhen Zhongzhuang

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhongzhuang Construction are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhongzhuang sustained solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenzhen Zhongzhuang and Andon Health

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

The idea behind Shenzhen Zhongzhuang Construction and Andon Health 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.