Correlation Between Wenzhou Kangning and Lancashire Holdings

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

Diversification Opportunities for Wenzhou Kangning and Lancashire Holdings

0.0

Correlation Coefficient

Wenzhou Kangning  Lancashire Holdings

Pay attention - limited upside

The 3 months correlation between Wenzhou and Lancashire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital and Lancashire Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancashire Holdings 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 Lancashire Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancashire Holdings has no effect on the direction of Wenzhou Kangning i.e., Wenzhou Kangning and Lancashire Holdings go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and Lancashire Holdings

If you would invest (100.00) in Lancashire Holdings Limited on October 24, 2024 and sell it today you would earn a total of  100.00  from holding Lancashire Holdings Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Wenzhou Kangning Hospital  vs.  Lancashire Holdings Limited

Wenzhou Kangning Hospital

Risk-Adjusted Performance

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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 uncertain 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.

Lancashire Holdings

Risk-Adjusted Performance

0 of 100

Modest

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

Pair Trading with Wenzhou Kangning and Lancashire Holdings

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

The idea behind Wenzhou Kangning Hospital and Lancashire Holdings Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.