Correlation Between Hangzhou Minsheng and Everjoy Health

Can any of the company-specific risk be diversified away by investing in both Hangzhou Minsheng and Everjoy Health 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 Hangzhou Minsheng and Everjoy Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hangzhou Minsheng Healthcare and Everjoy Health Group, you can compare the effects of market volatilities on Hangzhou Minsheng and Everjoy Health 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 Hangzhou Minsheng with a short position of Everjoy Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hangzhou Minsheng and Everjoy Health.

Diversification Opportunities for Hangzhou Minsheng and Everjoy Health

0.72

Correlation Coefficient

Hangzhou Minsheng  Everjoy Health

Poor diversification

The 3 months correlation between Hangzhou and Everjoy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Minsheng Healthcare and Everjoy Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everjoy Health Group and Hangzhou Minsheng 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 Hangzhou Minsheng Healthcare are associated (or correlated) with Everjoy Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everjoy Health Group has no effect on the direction of Hangzhou Minsheng i.e., Hangzhou Minsheng and Everjoy Health go up and down completely randomly.

Pair Corralation between Hangzhou Minsheng and Everjoy Health

Assuming the 90 days trading horizon Hangzhou Minsheng Healthcare is expected to under-perform the Everjoy Health. But the stock apears to be less risky and, when comparing its historical volatility, Hangzhou Minsheng Healthcare is 2.03 times less risky than Everjoy Health. The stock trades about -0.06 of its potential returns per unit of risk. The Everjoy Health Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  369.00  in Everjoy Health Group on November 29, 2024 and sell it today you would earn a total of  3.00  from holding Everjoy Health Group or generate 0.81% return on investment over 90 days.

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

Hangzhou Minsheng Healthcare  vs.  Everjoy Health Group

Hangzhou Minsheng

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hangzhou Minsheng Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Everjoy Health Group

Risk-Adjusted Performance

Weak

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

Pair Trading with Hangzhou Minsheng and Everjoy Health

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

The idea behind Hangzhou Minsheng Healthcare and Everjoy Health 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.