Correlation Between Humanwell Healthcare and Xiamen Hexing

Can any of the company-specific risk be diversified away by investing in both Humanwell Healthcare and Xiamen Hexing 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 Humanwell Healthcare and Xiamen Hexing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humanwell Healthcare Group and Xiamen Hexing Packaging, you can compare the effects of market volatilities on Humanwell Healthcare and Xiamen Hexing 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 Humanwell Healthcare with a short position of Xiamen Hexing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humanwell Healthcare and Xiamen Hexing.

Diversification Opportunities for Humanwell Healthcare and Xiamen Hexing

0.74

Correlation Coefficient

Humanwell Healthcare  Xiamen Hexing

Poor diversification

The 3 months correlation between Humanwell and Xiamen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Humanwell Healthcare Group and Xiamen Hexing Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Hexing Packaging and Humanwell Healthcare 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 Humanwell Healthcare Group are associated (or correlated) with Xiamen Hexing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Hexing Packaging has no effect on the direction of Humanwell Healthcare i.e., Humanwell Healthcare and Xiamen Hexing go up and down completely randomly.

Pair Corralation between Humanwell Healthcare and Xiamen Hexing

Assuming the 90 days trading horizon Humanwell Healthcare is expected to generate 1.36 times less return on investment than Xiamen Hexing. In addition to that, Humanwell Healthcare is 1.19 times more volatile than Xiamen Hexing Packaging. It trades about 0.03 of its total potential returns per unit of risk. Xiamen Hexing Packaging is currently generating about 0.05 per unit of volatility. If you would invest  282.00  in Xiamen Hexing Packaging on October 24, 2024 and sell it today you would earn a total of  15.00  from holding Xiamen Hexing Packaging or generate 5.32% return on investment over 90 days.

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

Humanwell Healthcare Group  vs.  Xiamen Hexing Packaging

Humanwell Healthcare

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Humanwell Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xiamen Hexing Packaging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Hexing Packaging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xiamen Hexing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Humanwell Healthcare and Xiamen Hexing

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

The idea behind Humanwell Healthcare Group and Xiamen Hexing Packaging 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.