Correlation Between CHC Healthcare and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and CHINA DEVELOPMENT 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 CHC Healthcare and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Healthcare Group and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on CHC Healthcare and CHINA DEVELOPMENT 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 CHC Healthcare with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and CHINA DEVELOPMENT.
Diversification Opportunities for CHC Healthcare and CHINA DEVELOPMENT
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CHC and CHINA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and CHC Healthcare 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 CHC Healthcare Group are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between CHC Healthcare and CHINA DEVELOPMENT
Assuming the 90 days trading horizon CHC Healthcare Group is expected to generate 6.03 times more return on investment than CHINA DEVELOPMENT. However, CHC Healthcare is 6.03 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about 0.14 of its potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.2 per unit of risk. If you would invest 4,160 in CHC Healthcare Group on December 5, 2024 and sell it today you would earn a total of 1,620 from holding CHC Healthcare Group or generate 38.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CHC Healthcare Group vs. CHINA DEVELOPMENT FINANCIAL
Performance |
Timeline |
CHC Healthcare Group |
CHINA DEVELOPMENT |
CHC Healthcare and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHC Healthcare and CHINA DEVELOPMENT
The main advantage of trading using opposite CHC Healthcare and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, CHINA DEVELOPMENT 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 CHINA DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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