Correlation Between Chun Yuan and Cowealth Medical

Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Cowealth Medical 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 Chun Yuan and Cowealth Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chun Yuan Steel and Cowealth Medical Holding, you can compare the effects of market volatilities on Chun Yuan and Cowealth Medical 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 Chun Yuan with a short position of Cowealth Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Cowealth Medical.

Diversification Opportunities for Chun Yuan and Cowealth Medical

-0.35

Correlation Coefficient

Chun Yuan  Cowealth Medical

Very good diversification

The 3 months correlation between Chun and Cowealth is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Cowealth Medical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowealth Medical Holding and Chun Yuan 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 Chun Yuan Steel are associated (or correlated) with Cowealth Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowealth Medical Holding has no effect on the direction of Chun Yuan i.e., Chun Yuan and Cowealth Medical go up and down completely randomly.

Pair Corralation between Chun Yuan and Cowealth Medical

Assuming the 90 days trading horizon Chun Yuan Steel is expected to generate 1.42 times more return on investment than Cowealth Medical. However, Chun Yuan is 1.42 times more volatile than Cowealth Medical Holding. It trades about 0.19 of its potential returns per unit of risk. Cowealth Medical Holding is currently generating about -0.11 per unit of risk. If you would invest  1,805  in Chun Yuan Steel on December 30, 2024 and sell it today you would earn a total of  255.00  from holding Chun Yuan Steel or generate 14.13% return on investment over 90 days.

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

Chun Yuan Steel  vs.  Cowealth Medical Holding

Chun Yuan Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chun Yuan Steel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chun Yuan showed solid returns over the last few months and may actually be approaching a breakup point.

Cowealth Medical Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cowealth Medical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cowealth Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chun Yuan and Cowealth Medical

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

The idea behind Chun Yuan Steel and Cowealth Medical Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.