Correlation Between HEALTHCARE TRPFD and Hongkong

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

By analyzing existing cross correlation between HEALTHCARE TRPFD SH and The Hongkong and, you can compare the effects of market volatilities on HEALTHCARE TRPFD and Hongkong 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 HEALTHCARE TRPFD with a short position of Hongkong. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE TRPFD and Hongkong.

Diversification Opportunities for HEALTHCARE TRPFD and Hongkong

0.03

Correlation Coefficient

HEALTHCARE TRPFD  Hongkong

Significant diversification

The 3 months correlation between HEALTHCARE and Hongkong is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE TRPFD SH and The Hongkong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hongkong and HEALTHCARE TRPFD 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 HEALTHCARE TRPFD SH are associated (or correlated) with Hongkong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hongkong has no effect on the direction of HEALTHCARE TRPFD i.e., HEALTHCARE TRPFD and Hongkong go up and down completely randomly.

Pair Corralation between HEALTHCARE TRPFD and Hongkong

Assuming the 90 days horizon HEALTHCARE TRPFD SH is expected to generate 1.83 times more return on investment than Hongkong. However, HEALTHCARE TRPFD is 1.83 times more volatile than The Hongkong and. It trades about 0.01 of its potential returns per unit of risk. The Hongkong and is currently generating about -0.05 per unit of risk. If you would invest  1,303  in HEALTHCARE TRPFD SH on December 25, 2024 and sell it today you would lose (43.00) from holding HEALTHCARE TRPFD SH or give up 3.3% of portfolio value over 90 days.

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

HEALTHCARE TRPFD SH  vs.  The Hongkong and

HEALTHCARE TRPFD

Risk-Adjusted Performance

Very Weak

Over the last 90 days HEALTHCARE TRPFD SH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HEALTHCARE TRPFD is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

The Hongkong

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hongkong and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HEALTHCARE TRPFD and Hongkong

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

The idea behind HEALTHCARE TRPFD SH and The Hongkong and 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.