Correlation Between Sanbo Hospital and Zhengping RoadBridge

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

Diversification Opportunities for Sanbo Hospital and Zhengping RoadBridge

-0.22

Correlation Coefficient

Sanbo Hospital  Zhengping RoadBridge

Very good diversification

The 3 months correlation between Sanbo and Zhengping is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge 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 Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Zhengping RoadBridge

Assuming the 90 days trading horizon Sanbo Hospital is expected to generate 5.49 times less return on investment than Zhengping RoadBridge. But when comparing it to its historical volatility, Sanbo Hospital Management is 1.23 times less risky than Zhengping RoadBridge. It trades about 0.01 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Zhengping RoadBridge Constr on December 26, 2024 and sell it today you would earn a total of  21.00  from holding Zhengping RoadBridge Constr or generate 5.87% return on investment over 90 days.

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

Sanbo Hospital Management  vs.  Zhengping RoadBridge Constr

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.

Zhengping RoadBridge

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Sanbo Hospital and Zhengping RoadBridge

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

The idea behind Sanbo Hospital Management and Zhengping RoadBridge Constr 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.