Correlation Between Guangzhou Boji and Heren Health

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

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

Diversification Opportunities for Guangzhou Boji and Heren Health

0.61

Correlation Coefficient

Guangzhou Boji  Heren Health

Poor diversification

The 3 months correlation between Guangzhou and Heren is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Boji Medical and Heren Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heren Health and Guangzhou Boji 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 Guangzhou Boji Medical are associated (or correlated) with Heren Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heren Health has no effect on the direction of Guangzhou Boji i.e., Guangzhou Boji and Heren Health go up and down completely randomly.

Pair Corralation between Guangzhou Boji and Heren Health

Assuming the 90 days trading horizon Guangzhou Boji Medical is expected to generate 0.83 times more return on investment than Heren Health. However, Guangzhou Boji Medical is 1.21 times less risky than Heren Health. It trades about -0.03 of its potential returns per unit of risk. Heren Health Co is currently generating about -0.03 per unit of risk. If you would invest  910.00  in Guangzhou Boji Medical on October 23, 2024 and sell it today you would lose (67.00) from holding Guangzhou Boji Medical or give up 7.36% of portfolio value over 90 days.

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

Guangzhou Boji Medical  vs.  Heren Health Co

Guangzhou Boji Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Boji Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Boji is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Heren Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heren Health Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guangzhou Boji and Heren Health

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

The idea behind Guangzhou Boji Medical and Heren Health Co 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.