Correlation Between Wenzhou Kangning and Tokyu Construction

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

Diversification Opportunities for Wenzhou Kangning and Tokyu Construction

-0.39

Correlation Coefficient

Wenzhou Kangning  Tokyu Construction

Very good diversification

The 3 months correlation between Wenzhou and Tokyu is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital and Tokyu Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu Construction 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 Tokyu Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu Construction has no effect on the direction of Wenzhou Kangning i.e., Wenzhou Kangning and Tokyu Construction go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and Tokyu Construction

Assuming the 90 days trading horizon Wenzhou Kangning Hospital is expected to generate 2.08 times more return on investment than Tokyu Construction. However, Wenzhou Kangning is 2.08 times more volatile than Tokyu Construction Co. It trades about 0.06 of its potential returns per unit of risk. Tokyu Construction Co is currently generating about -0.04 per unit of risk. If you would invest  101.00  in Wenzhou Kangning Hospital on October 7, 2024 and sell it today you would earn a total of  44.00  from holding Wenzhou Kangning Hospital or generate 43.56% return on investment over 90 days.

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

Wenzhou Kangning Hospital  vs.  Tokyu Construction Co

Wenzhou Kangning Hospital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wenzhou Kangning Hospital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wenzhou Kangning may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tokyu Construction

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tokyu Construction Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tokyu Construction 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 Tokyu Construction

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

The idea behind Wenzhou Kangning Hospital and Tokyu Construction Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.