Correlation Between Humanwell Healthcare and Yunnan Jianzhijia

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

Diversification Opportunities for Humanwell Healthcare and Yunnan Jianzhijia

0.74

Correlation Coefficient

Humanwell Healthcare  Yunnan Jianzhijia

Poor diversification

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

Pair Corralation between Humanwell Healthcare and Yunnan Jianzhijia

Assuming the 90 days trading horizon Humanwell Healthcare is expected to generate 3.57 times less return on investment than Yunnan Jianzhijia. But when comparing it to its historical volatility, Humanwell Healthcare Group is 1.52 times less risky than Yunnan Jianzhijia. It trades about 0.06 of its potential returns per unit of risk. Yunnan Jianzhijia Health Chain is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,842  in Yunnan Jianzhijia Health Chain on September 2, 2024 and sell it today you would earn a total of  790.00  from holding Yunnan Jianzhijia Health Chain or generate 42.89% 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.  Yunnan Jianzhijia Health Chain

Humanwell Healthcare

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Humanwell Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yunnan Jianzhijia

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Jianzhijia Health Chain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Jianzhijia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humanwell Healthcare and Yunnan Jianzhijia

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

The idea behind Humanwell Healthcare Group and Yunnan Jianzhijia Health Chain 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..