Correlation Between Yili Chuanning and Chison Medical

Can any of the company-specific risk be diversified away by investing in both Yili Chuanning and Chison Medical 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 Yili Chuanning and Chison Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yili Chuanning Biotechnology and Chison Medical Technologies, you can compare the effects of market volatilities on Yili Chuanning and Chison Medical 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 Yili Chuanning with a short position of Chison Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yili Chuanning and Chison Medical.

Diversification Opportunities for Yili Chuanning and Chison Medical

0.88

Correlation Coefficient

Yili Chuanning  Chison Medical

Very poor diversification

The 3 months correlation between Yili and Chison is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Yili Chuanning Biotechnology and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn and Yili Chuanning 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 Yili Chuanning Biotechnology are associated (or correlated) with Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Yili Chuanning i.e., Yili Chuanning and Chison Medical go up and down completely randomly.

Pair Corralation between Yili Chuanning and Chison Medical

Assuming the 90 days trading horizon Yili Chuanning is expected to generate 7.04 times less return on investment than Chison Medical. But when comparing it to its historical volatility, Yili Chuanning Biotechnology is 2.0 times less risky than Chison Medical. It trades about 0.03 of its potential returns per unit of risk. Chison Medical Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,495  in Chison Medical Technologies on December 25, 2024 and sell it today you would earn a total of  642.00  from holding Chison Medical Technologies or generate 25.73% return on investment over 90 days.

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

Yili Chuanning Biotechnology  vs.  Chison Medical Technologies

Yili Chuanning Biote

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yili Chuanning Biotechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yili Chuanning is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chison Medical Techn

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chison Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yili Chuanning and Chison Medical

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

The idea behind Yili Chuanning Biotechnology and Chison Medical Technologies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.