Correlation Between Wenzhou Kangning and NEW PACIFIC

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

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

Diversification Opportunities for Wenzhou Kangning and NEW PACIFIC

0.13

Correlation Coefficient

Wenzhou Kangning  NEW PACIFIC

Average diversification

The 3 months correlation between Wenzhou and NEW is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital and NEW PACIFIC METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW PACIFIC METALS and Wenzhou Kangning 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 Wenzhou Kangning Hospital are associated (or correlated) with NEW PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW PACIFIC METALS has no effect on the direction of Wenzhou Kangning i.e., Wenzhou Kangning and NEW PACIFIC go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and NEW PACIFIC

Assuming the 90 days trading horizon Wenzhou Kangning Hospital is expected to generate 0.65 times more return on investment than NEW PACIFIC. However, Wenzhou Kangning Hospital is 1.54 times less risky than NEW PACIFIC. It trades about 0.05 of its potential returns per unit of risk. NEW PACIFIC METALS is currently generating about -0.02 per unit of risk. If you would invest  83.00  in Wenzhou Kangning Hospital on October 25, 2024 and sell it today you would earn a total of  53.00  from holding Wenzhou Kangning Hospital or generate 63.86% return on investment over 90 days.

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

Wenzhou Kangning Hospital  vs.  NEW PACIFIC METALS

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NEW PACIFIC METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW PACIFIC METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Wenzhou Kangning and NEW PACIFIC

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

The idea behind Wenzhou Kangning Hospital and NEW PACIFIC METALS 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.