Correlation Between Henan Provincial and Winner Medical

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

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

Diversification Opportunities for Henan Provincial and Winner Medical

-0.61

Correlation Coefficient

Henan Provincial  Winner Medical

Excellent diversification

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

Pair Corralation between Henan Provincial and Winner Medical

Assuming the 90 days trading horizon Henan Provincial Communications is expected to under-perform the Winner Medical. But the stock apears to be less risky and, when comparing its historical volatility, Henan Provincial Communications is 1.3 times less risky than Winner Medical. The stock trades about -0.37 of its potential returns per unit of risk. The Winner Medical Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,705  in Winner Medical Co on October 10, 2024 and sell it today you would earn a total of  232.00  from holding Winner Medical Co or generate 6.26% return on investment over 90 days.

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

Henan Provincial Communication  vs.  Winner Medical Co

Henan Provincial Com

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henan Provincial Communications 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.

Winner Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Winner Medical Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Winner Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Henan Provincial and Winner Medical

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

The idea behind Henan Provincial Communications and Winner Medical 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.