Correlation Between Kidswant Children and Dezhan HealthCare

Can any of the company-specific risk be diversified away by investing in both Kidswant Children and Dezhan HealthCare 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 Kidswant Children and Dezhan HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kidswant Children Products and Dezhan HealthCare Co, you can compare the effects of market volatilities on Kidswant Children and Dezhan HealthCare 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 Kidswant Children with a short position of Dezhan HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kidswant Children and Dezhan HealthCare.

Diversification Opportunities for Kidswant Children and Dezhan HealthCare

0.43

Correlation Coefficient

Kidswant Children  Dezhan HealthCare

Very weak diversification

The 3 months correlation between Kidswant and Dezhan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kidswant Children Products and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare and Kidswant Children 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 Kidswant Children Products are associated (or correlated) with Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of Kidswant Children i.e., Kidswant Children and Dezhan HealthCare go up and down completely randomly.

Pair Corralation between Kidswant Children and Dezhan HealthCare

Assuming the 90 days trading horizon Kidswant Children Products is expected to generate 1.38 times more return on investment than Dezhan HealthCare. However, Kidswant Children is 1.38 times more volatile than Dezhan HealthCare Co. It trades about 0.18 of its potential returns per unit of risk. Dezhan HealthCare Co is currently generating about -0.16 per unit of risk. If you would invest  1,130  in Kidswant Children Products on October 23, 2024 and sell it today you would earn a total of  132.00  from holding Kidswant Children Products or generate 11.68% return on investment over 90 days.

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

Kidswant Children Products  vs.  Dezhan HealthCare Co

Kidswant Children

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kidswant Children Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kidswant Children sustained solid returns over the last few months and may actually be approaching a breakup point.

Dezhan HealthCare

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dezhan HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kidswant Children and Dezhan HealthCare

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

The idea behind Kidswant Children Products and Dezhan HealthCare 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..