Correlation Between Sanbo Hospital and Chengtun Mining

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

Diversification Opportunities for Sanbo Hospital and Chengtun Mining

0.44

Correlation Coefficient

Sanbo Hospital  Chengtun Mining

Very weak diversification

The 3 months correlation between Sanbo and Chengtun is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and Chengtun Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengtun Mining Group 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 Chengtun Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengtun Mining Group has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and Chengtun Mining go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Chengtun Mining

Assuming the 90 days trading horizon Sanbo Hospital is expected to generate 15.61 times less return on investment than Chengtun Mining. In addition to that, Sanbo Hospital is 1.34 times more volatile than Chengtun Mining Group. It trades about 0.01 of its total potential returns per unit of risk. Chengtun Mining Group is currently generating about 0.21 per unit of volatility. If you would invest  468.00  in Chengtun Mining Group on December 26, 2024 and sell it today you would earn a total of  134.00  from holding Chengtun Mining Group or generate 28.63% return on investment over 90 days.

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

Sanbo Hospital Management  vs.  Chengtun Mining Group

Sanbo Hospital Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanbo Hospital Management has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Chengtun Mining Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanbo Hospital and Chengtun Mining

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

The idea behind Sanbo Hospital Management and Chengtun Mining Group 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.