Correlation Between Humanwell Healthcare and Ligao Foods

Can any of the company-specific risk be diversified away by investing in both Humanwell Healthcare and Ligao Foods 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 Ligao Foods 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 Ligao Foods CoLtd, you can compare the effects of market volatilities on Humanwell Healthcare and Ligao Foods 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 Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humanwell Healthcare and Ligao Foods.

Diversification Opportunities for Humanwell Healthcare and Ligao Foods

-0.4

Correlation Coefficient

Humanwell Healthcare  Ligao Foods

Very good diversification

The 3 months correlation between Humanwell and Ligao is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Humanwell Healthcare Group and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd 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 Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Humanwell Healthcare i.e., Humanwell Healthcare and Ligao Foods go up and down completely randomly.

Pair Corralation between Humanwell Healthcare and Ligao Foods

Assuming the 90 days trading horizon Humanwell Healthcare Group is expected to under-perform the Ligao Foods. But the stock apears to be less risky and, when comparing its historical volatility, Humanwell Healthcare Group is 1.34 times less risky than Ligao Foods. The stock trades about -0.13 of its potential returns per unit of risk. The Ligao Foods CoLtd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,211  in Ligao Foods CoLtd on December 26, 2024 and sell it today you would earn a total of  14.00  from holding Ligao Foods CoLtd or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Humanwell Healthcare Group  vs.  Ligao Foods CoLtd

Humanwell Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humanwell Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ligao Foods CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ligao Foods CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ligao Foods 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 Ligao Foods

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

The idea behind Humanwell Healthcare Group and Ligao Foods CoLtd 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.