Correlation Between Kailong High and Sanbo Hospital

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Can any of the company-specific risk be diversified away by investing in both Kailong High and Sanbo Hospital 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 Kailong High and Sanbo Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kailong High Technology and Sanbo Hospital Management, you can compare the effects of market volatilities on Kailong High and Sanbo Hospital 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 Kailong High with a short position of Sanbo Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kailong High and Sanbo Hospital.

Diversification Opportunities for Kailong High and Sanbo Hospital

KailongSanboDiversified AwayKailongSanboDiversified Away100%
0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kailong and Sanbo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kailong High Technology and Sanbo Hospital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanbo Hospital Management and Kailong High 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 Kailong High Technology are associated (or correlated) with Sanbo Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanbo Hospital Management has no effect on the direction of Kailong High i.e., Kailong High and Sanbo Hospital go up and down completely randomly.

Pair Corralation between Kailong High and Sanbo Hospital

Assuming the 90 days trading horizon Kailong High is expected to generate 2.59 times less return on investment than Sanbo Hospital. But when comparing it to its historical volatility, Kailong High Technology is 1.03 times less risky than Sanbo Hospital. It trades about 0.02 of its potential returns per unit of risk. Sanbo Hospital Management is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,630  in Sanbo Hospital Management on November 19, 2024 and sell it today you would earn a total of  411.00  from holding Sanbo Hospital Management or generate 8.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.31%
ValuesDaily Returns

Kailong High Technology  vs.  Sanbo Hospital Management

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15300912 301293
       Timeline  
Kailong High Technology 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kailong High Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kailong High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1011121314
Sanbo Hospital Management 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sanbo Hospital Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanbo Hospital may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb42444648505254

Kailong High and Sanbo Hospital Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.3-9.96-6.62-3.280.033.366.7910.2113.63 0.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15300912 301293
       Returns  

Pair Trading with Kailong High and Sanbo Hospital

The main advantage of trading using opposite Kailong High and Sanbo Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kailong High position performs unexpectedly, Sanbo Hospital 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 Sanbo Hospital will offset losses from the drop in Sanbo Hospital's long position.
The idea behind Kailong High Technology and Sanbo Hospital Management 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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