Correlation Between Winner Medical and Longxing Chemical

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

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

Diversification Opportunities for Winner Medical and Longxing Chemical

0.86

Correlation Coefficient

Winner Medical  Longxing Chemical

Very poor diversification

The 3 months correlation between Winner and Longxing is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Winner Medical Co and Longxing Chemical Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longxing Chemical Stock and Winner Medical 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 Winner Medical Co are associated (or correlated) with Longxing Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longxing Chemical Stock has no effect on the direction of Winner Medical i.e., Winner Medical and Longxing Chemical go up and down completely randomly.

Pair Corralation between Winner Medical and Longxing Chemical

Assuming the 90 days trading horizon Winner Medical Co is expected to generate 0.84 times more return on investment than Longxing Chemical. However, Winner Medical Co is 1.19 times less risky than Longxing Chemical. It trades about 0.1 of its potential returns per unit of risk. Longxing Chemical Stock is currently generating about -0.02 per unit of risk. 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 Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Winner Medical Co  vs.  Longxing Chemical Stock

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.

Longxing Chemical Stock

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Longxing Chemical Stock are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Longxing Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winner Medical and Longxing Chemical

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

The idea behind Winner Medical Co and Longxing Chemical Stock 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.