Correlation Between Wenzhou Kangning and Garofalo Health

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

Diversification Opportunities for Wenzhou Kangning and Garofalo Health

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Wenzhou and Garofalo is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital and Garofalo Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garofalo Health Care 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 Garofalo Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garofalo Health Care has no effect on the direction of Wenzhou Kangning i.e., Wenzhou Kangning and Garofalo Health go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and Garofalo Health

Assuming the 90 days trading horizon Wenzhou Kangning Hospital is expected to under-perform the Garofalo Health. In addition to that, Wenzhou Kangning is 1.14 times more volatile than Garofalo Health Care. It trades about -0.13 of its total potential returns per unit of risk. Garofalo Health Care is currently generating about -0.14 per unit of volatility. If you would invest  568.00  in Garofalo Health Care on October 24, 2024 and sell it today you would lose (66.00) from holding Garofalo Health Care or give up 11.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Wenzhou Kangning Hospital  vs.  Garofalo Health Care

 Performance 
       Timeline  
Wenzhou Kangning Hospital 

Risk-Adjusted Performance

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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.
Garofalo Health Care 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Garofalo Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Wenzhou Kangning and Garofalo Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wenzhou Kangning and Garofalo Health

The main advantage of trading using opposite Wenzhou Kangning and Garofalo Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wenzhou Kangning position performs unexpectedly, Garofalo Health 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 Garofalo Health will offset losses from the drop in Garofalo Health's long position.
The idea behind Wenzhou Kangning Hospital and Garofalo Health Care 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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