Correlation Between GRUPO CARSO and Wenzhou Kangning

Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO and Wenzhou Kangning 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 GRUPO CARSO and Wenzhou Kangning into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRUPO CARSO A1 and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on GRUPO CARSO and Wenzhou Kangning 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 GRUPO CARSO with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO and Wenzhou Kangning.

Diversification Opportunities for GRUPO CARSO and Wenzhou Kangning

-0.15

Correlation Coefficient

GRUPO CARSO  Wenzhou Kangning

Good diversification

The 3 months correlation between GRUPO and Wenzhou is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and GRUPO CARSO 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 GRUPO CARSO A1 are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of GRUPO CARSO i.e., GRUPO CARSO and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between GRUPO CARSO and Wenzhou Kangning

Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to generate 2.72 times more return on investment than Wenzhou Kangning. However, GRUPO CARSO is 2.72 times more volatile than Wenzhou Kangning Hospital. It trades about 0.03 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.13 per unit of risk. If you would invest  545.00  in GRUPO CARSO A1 on October 26, 2024 and sell it today you would earn a total of  15.00  from holding GRUPO CARSO A1 or generate 2.75% return on investment over 90 days.

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

GRUPO CARSO A1  vs.  Wenzhou Kangning Hospital

GRUPO CARSO A1

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GRUPO CARSO may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wenzhou Kangning Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wenzhou Kangning Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GRUPO CARSO and Wenzhou Kangning

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

The idea behind GRUPO CARSO A1 and Wenzhou Kangning Hospital 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.