Correlation Between Sanbo Hospital and Tianjin Ruixin

Can any of the company-specific risk be diversified away by investing in both Sanbo Hospital and Tianjin Ruixin 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 Sanbo Hospital and Tianjin Ruixin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sanbo Hospital Management and Tianjin Ruixin Technology, you can compare the effects of market volatilities on Sanbo Hospital and Tianjin Ruixin 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 Sanbo Hospital with a short position of Tianjin Ruixin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanbo Hospital and Tianjin Ruixin.

Diversification Opportunities for Sanbo Hospital and Tianjin Ruixin

0.26

Correlation Coefficient

Sanbo Hospital  Tianjin Ruixin

Modest diversification

The 3 months correlation between Sanbo and Tianjin is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and Tianjin Ruixin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Ruixin Technology and Sanbo Hospital 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 Sanbo Hospital Management are associated (or correlated) with Tianjin Ruixin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Ruixin Technology has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and Tianjin Ruixin go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Tianjin Ruixin

Assuming the 90 days trading horizon Sanbo Hospital Management is expected to generate 1.23 times more return on investment than Tianjin Ruixin. However, Sanbo Hospital is 1.23 times more volatile than Tianjin Ruixin Technology. It trades about 0.04 of its potential returns per unit of risk. Tianjin Ruixin Technology is currently generating about 0.02 per unit of risk. If you would invest  2,960  in Sanbo Hospital Management on October 24, 2024 and sell it today you would earn a total of  1,455  from holding Sanbo Hospital Management or generate 49.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.55%
Values	Daily Returns

Sanbo Hospital Management  vs.  Tianjin Ruixin Technology

Sanbo Hospital Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sanbo Hospital Management are ranked lower than 2 (%) 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 February 2025.

Tianjin Ruixin Technology

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Sanbo Hospital and Tianjin Ruixin

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

The idea behind Sanbo Hospital Management and Tianjin Ruixin Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.