Correlation Between Youngy Health and Guangdong Taienkang

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

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

Diversification Opportunities for Youngy Health and Guangdong Taienkang

0.47

Correlation Coefficient

Youngy Health  Guangdong Taienkang

Very weak diversification

The 3 months correlation between Youngy and Guangdong is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Youngy Health Co and Guangdong Taienkang Pharmaceut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Taienkang and Youngy 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 Youngy Health Co are associated (or correlated) with Guangdong Taienkang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Taienkang has no effect on the direction of Youngy Health i.e., Youngy Health and Guangdong Taienkang go up and down completely randomly.

Pair Corralation between Youngy Health and Guangdong Taienkang

Assuming the 90 days trading horizon Youngy Health Co is expected to generate 1.1 times more return on investment than Guangdong Taienkang. However, Youngy Health is 1.1 times more volatile than Guangdong Taienkang Pharmaceutical. It trades about 0.01 of its potential returns per unit of risk. Guangdong Taienkang Pharmaceutical is currently generating about -0.01 per unit of risk. If you would invest  382.00  in Youngy Health Co on October 11, 2024 and sell it today you would lose (27.00) from holding Youngy Health Co or give up 7.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Youngy Health Co  vs.  Guangdong Taienkang Pharmaceut

Youngy Health

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Youngy Health Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youngy Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Taienkang

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Taienkang Pharmaceutical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Taienkang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Youngy Health and Guangdong Taienkang

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

The idea behind Youngy Health Co and Guangdong Taienkang Pharmaceutical 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.