Correlation Between PURETECH HEALTH and Wenzhou Kangning

Can any of the company-specific risk be diversified away by investing in both PURETECH HEALTH and Wenzhou Kangning 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 PURETECH HEALTH and Wenzhou Kangning into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PURETECH HEALTH PLC and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on PURETECH HEALTH and Wenzhou Kangning 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 PURETECH HEALTH with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and Wenzhou Kangning.

Diversification Opportunities for PURETECH HEALTH and Wenzhou Kangning

0.63

Correlation Coefficient

PURETECH HEALTH  Wenzhou Kangning

Poor diversification

The 3 months correlation between PURETECH and Wenzhou is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and PURETECH 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 PURETECH HEALTH PLC are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and Wenzhou Kangning

Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the Wenzhou Kangning. In addition to that, PURETECH HEALTH is 2.47 times more volatile than Wenzhou Kangning Hospital. It trades about -0.21 of its total potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.25 per unit of volatility. If you would invest  153.00  in Wenzhou Kangning Hospital on October 8, 2024 and sell it today you would lose (8.00) from holding Wenzhou Kangning Hospital or give up 5.23% of portfolio value over 90 days.

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

PURETECH HEALTH PLC  vs.  Wenzhou Kangning Hospital

PURETECH HEALTH PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PURETECH HEALTH PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PURETECH HEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wenzhou Kangning Hospital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wenzhou Kangning Hospital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wenzhou Kangning may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PURETECH HEALTH and Wenzhou Kangning

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

The idea behind PURETECH HEALTH PLC and Wenzhou Kangning Hospital 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.