Correlation Between Wenzhou Kangning and HEALTHSTREAM (HL5SG)

Can any of the company-specific risk be diversified away by investing in both Wenzhou Kangning and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM, you can compare the effects of market volatilities on Wenzhou Kangning and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Wenzhou Kangning and HEALTHSTREAM (HL5SG).

Diversification Opportunities for Wenzhou Kangning and HEALTHSTREAM (HL5SG)

0.23

Correlation Coefficient

Wenzhou Kangning  HEALTHSTREAM (HL5SG)

Modest diversification

The 3 months correlation between Wenzhou and HEALTHSTREAM is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital and HEALTHSTREAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHSTREAM (HL5SG) has no effect on the direction of Wenzhou Kangning i.e., Wenzhou Kangning and HEALTHSTREAM (HL5SG) go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and HEALTHSTREAM (HL5SG)

Assuming the 90 days trading horizon Wenzhou Kangning Hospital is expected to under-perform the HEALTHSTREAM (HL5SG). In addition to that, Wenzhou Kangning is 1.98 times more volatile than HEALTHSTREAM. It trades about -0.24 of its total potential returns per unit of risk. HEALTHSTREAM is currently generating about -0.07 per unit of volatility. If you would invest  3,057  in HEALTHSTREAM on December 26, 2024 and sell it today you would lose (177.00) from holding HEALTHSTREAM or give up 5.79% of portfolio value over 90 days.

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

Wenzhou Kangning Hospital  vs.  HEALTHSTREAM

Wenzhou Kangning Hospital

Risk-Adjusted Performance

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

Very Weak

Over the last 90 days HEALTHSTREAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEALTHSTREAM (HL5SG) is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wenzhou Kangning and HEALTHSTREAM (HL5SG)

The main advantage of trading using opposite Wenzhou Kangning and HEALTHSTREAM (HL5SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wenzhou Kangning position performs unexpectedly, HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) will offset losses from the drop in HEALTHSTREAM (HL5SG)'s long position.

The idea behind Wenzhou Kangning Hospital and HEALTHSTREAM 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.