Correlation Between Haverty Furniture and Wenzhou Kangning

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

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

Diversification Opportunities for Haverty Furniture and Wenzhou Kangning

-0.59

Correlation Coefficient

Haverty Furniture  Wenzhou Kangning

Excellent diversification

The 3 months correlation between Haverty and Wenzhou is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies 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 Haverty Furniture 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 Haverty Furniture Companies 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 Haverty Furniture i.e., Haverty Furniture and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between Haverty Furniture and Wenzhou Kangning

Assuming the 90 days horizon Haverty Furniture Companies is expected to under-perform the Wenzhou Kangning. But the stock apears to be less risky and, when comparing its historical volatility, Haverty Furniture Companies is 1.15 times less risky than Wenzhou Kangning. The stock trades about -0.01 of its potential returns per unit of risk. The Wenzhou Kangning Hospital is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Wenzhou Kangning Hospital on October 11, 2024 and sell it today you would earn a total of  59.00  from holding Wenzhou Kangning Hospital or generate 71.08% return on investment over 90 days.

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

Haverty Furniture Companies  vs.  Wenzhou Kangning Hospital

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Haverty Furniture is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Wenzhou Kangning Hospital

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wenzhou Kangning Hospital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Wenzhou Kangning is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Haverty Furniture and Wenzhou Kangning

The main advantage of trading using opposite Haverty Furniture and Wenzhou Kangning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture 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 Haverty Furniture Companies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.