Correlation Between Hangzhou Minsheng and GEM

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

Diversification Opportunities for Hangzhou Minsheng and GEM

0.79

Correlation Coefficient

Hangzhou Minsheng  GEM

Poor diversification

The 3 months correlation between Hangzhou and GEM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Minsheng Healthcare and GEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEM Co 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 GEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEM Co has no effect on the direction of Hangzhou Minsheng i.e., Hangzhou Minsheng and GEM go up and down completely randomly.

Pair Corralation between Hangzhou Minsheng and GEM

Assuming the 90 days trading horizon Hangzhou Minsheng is expected to generate 3.2 times less return on investment than GEM. In addition to that, Hangzhou Minsheng is 1.23 times more volatile than GEM Co. It trades about 0.0 of its total potential returns per unit of risk. GEM Co is currently generating about 0.01 per unit of volatility. If you would invest  667.00  in GEM Co on December 24, 2024 and sell it today you would earn a total of  2.00  from holding GEM Co or generate 0.3% 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.  GEM Co

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 somewhat strong basic indicators, Hangzhou Minsheng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GEM Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days GEM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GEM 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 GEM

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

The idea behind Hangzhou Minsheng Healthcare and GEM Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.