Correlation Between Sanbo Hospital and Shanghai Broadband

Can any of the company-specific risk be diversified away by investing in both Sanbo Hospital and Shanghai Broadband 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 Shanghai Broadband 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 Shanghai Broadband Technology, you can compare the effects of market volatilities on Sanbo Hospital and Shanghai Broadband 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 Shanghai Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanbo Hospital and Shanghai Broadband.

Diversification Opportunities for Sanbo Hospital and Shanghai Broadband

0.49

Correlation Coefficient

Sanbo Hospital  Shanghai Broadband

Very weak diversification

The 3 months correlation between Sanbo and Shanghai is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and Shanghai Broadband Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Broadband 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 Shanghai Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Broadband has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and Shanghai Broadband go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Shanghai Broadband

Assuming the 90 days trading horizon Sanbo Hospital Management is expected to generate 1.79 times more return on investment than Shanghai Broadband. However, Sanbo Hospital is 1.79 times more volatile than Shanghai Broadband Technology. It trades about 0.04 of its potential returns per unit of risk. Shanghai Broadband Technology is currently generating about -0.02 per unit of risk. If you would invest  2,960  in Sanbo Hospital Management on October 23, 2024 and sell it today you would earn a total of  1,482  from holding Sanbo Hospital Management or generate 50.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.32%
Values	Daily Returns

Sanbo Hospital Management  vs.  Shanghai Broadband Technology

Sanbo Hospital Management

Risk-Adjusted Performance

1 of 100

Weak

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

Shanghai Broadband

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Broadband Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Broadband may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sanbo Hospital and Shanghai Broadband

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

The idea behind Sanbo Hospital Management and Shanghai Broadband 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.