Correlation Between Zhonghong Pulin and Chison Medical

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

By analyzing existing cross correlation between Zhonghong Pulin Medical and Chison Medical Technologies, you can compare the effects of market volatilities on Zhonghong Pulin and Chison 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 Zhonghong Pulin with a short position of Chison Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhonghong Pulin and Chison Medical.

Diversification Opportunities for Zhonghong Pulin and Chison Medical

0.9

Correlation Coefficient

Zhonghong Pulin  Chison Medical

Almost no diversification

The 3 months correlation between Zhonghong and Chison is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Zhonghong Pulin Medical and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn and Zhonghong Pulin 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 Zhonghong Pulin Medical are associated (or correlated) with Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Zhonghong Pulin i.e., Zhonghong Pulin and Chison Medical go up and down completely randomly.

Pair Corralation between Zhonghong Pulin and Chison Medical

Assuming the 90 days trading horizon Zhonghong Pulin Medical is expected to under-perform the Chison Medical. But the stock apears to be less risky and, when comparing its historical volatility, Zhonghong Pulin Medical is 1.11 times less risky than Chison Medical. The stock trades about -0.15 of its potential returns per unit of risk. The Chison Medical Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,580  in Chison Medical Technologies on September 22, 2024 and sell it today you would earn a total of  50.00  from holding Chison Medical Technologies or generate 1.94% return on investment over 90 days.

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

Zhonghong Pulin Medical  vs.  Chison Medical Technologies

Zhonghong Pulin Medical

Risk-Adjusted Performance

12 of 100

Good

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

Chison Medical Techn

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chison Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhonghong Pulin and Chison Medical

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

The idea behind Zhonghong Pulin Medical and Chison Medical Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.