Correlation Between Sanbo Hospital and Sichuan Changhong

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

Diversification Opportunities for Sanbo Hospital and Sichuan Changhong

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sanbo and Sichuan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and Sichuan Changhong Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Changhong 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 Sichuan Changhong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Changhong has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and Sichuan Changhong go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Sichuan Changhong

Assuming the 90 days trading horizon Sanbo Hospital Management is expected to generate 1.21 times more return on investment than Sichuan Changhong. However, Sanbo Hospital is 1.21 times more volatile than Sichuan Changhong Electric. It trades about -0.17 of its potential returns per unit of risk. Sichuan Changhong Electric is currently generating about -0.28 per unit of risk. If you would invest  4,965  in Sanbo Hospital Management on October 10, 2024 and sell it today you would lose (750.00) from holding Sanbo Hospital Management or give up 15.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Sanbo Hospital Management  vs.  Sichuan Changhong Electric

 Performance 
       Timeline  
Sanbo Hospital Management 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
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.
Sichuan Changhong 

Risk-Adjusted Performance

11 of 100

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

Sanbo Hospital and Sichuan Changhong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sanbo Hospital and Sichuan Changhong

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

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