Correlation Between By Health and Guangdong Xiongsu

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

By analyzing existing cross correlation between By health and Guangdong Xiongsu Technology, you can compare the effects of market volatilities on By Health and Guangdong Xiongsu 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 By Health with a short position of Guangdong Xiongsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of By Health and Guangdong Xiongsu.

Diversification Opportunities for By Health and Guangdong Xiongsu

0.31

Correlation Coefficient

By Health  Guangdong Xiongsu

Weak diversification

The 3 months correlation between 300146 and Guangdong is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding By health and Guangdong Xiongsu Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Xiongsu and By 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 By health are associated (or correlated) with Guangdong Xiongsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Xiongsu has no effect on the direction of By Health i.e., By Health and Guangdong Xiongsu go up and down completely randomly.

Pair Corralation between By Health and Guangdong Xiongsu

Assuming the 90 days trading horizon By health is expected to under-perform the Guangdong Xiongsu. But the stock apears to be less risky and, when comparing its historical volatility, By health is 3.44 times less risky than Guangdong Xiongsu. The stock trades about -0.28 of its potential returns per unit of risk. The Guangdong Xiongsu Technology is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  786.00  in Guangdong Xiongsu Technology on October 10, 2024 and sell it today you would lose (79.00) from holding Guangdong Xiongsu Technology or give up 10.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

By health  vs.  Guangdong Xiongsu Technology

By health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days By health 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.

Guangdong Xiongsu

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Xiongsu Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Xiongsu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with By Health and Guangdong Xiongsu

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

The idea behind By health and Guangdong Xiongsu Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.