Correlation Between Winner Medical Co and Shenzhen Glory

Can any of the company-specific risk be diversified away by investing in both Winner Medical Co and Shenzhen Glory 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 Co and Shenzhen Glory 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 Shenzhen Glory Medical, you can compare the effects of market volatilities on Winner Medical Co and Shenzhen Glory 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 Co with a short position of Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winner Medical Co and Shenzhen Glory.

Diversification Opportunities for Winner Medical Co and Shenzhen Glory

0.24

Correlation Coefficient

Winner Medical Co  Shenzhen Glory

Modest diversification

The 3 months correlation between Winner and Shenzhen is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Winner Medical Co and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical and Winner Medical Co 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 Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of Winner Medical Co i.e., Winner Medical Co and Shenzhen Glory go up and down completely randomly.

Pair Corralation between Winner Medical Co and Shenzhen Glory

Assuming the 90 days trading horizon Winner Medical Co is expected to generate 1.38 times more return on investment than Shenzhen Glory. However, Winner Medical Co is 1.38 times more volatile than Shenzhen Glory Medical. It trades about 0.05 of its potential returns per unit of risk. Shenzhen Glory Medical is currently generating about 0.05 per unit of risk. If you would invest  4,195  in Winner Medical Co on December 26, 2024 and sell it today you would earn a total of  242.00  from holding Winner Medical Co or generate 5.77% return on investment over 90 days.

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

Winner Medical Co  vs.  Shenzhen Glory Medical

Winner Medical Co

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Winner Medical Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Winner Medical Co may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shenzhen Glory Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Glory Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Glory may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Winner Medical Co and Shenzhen Glory

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

The idea behind Winner Medical Co and Shenzhen Glory Medical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.