Correlation Between Humanwell Healthcare and Hygon Information

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

Diversification Opportunities for Humanwell Healthcare and Hygon Information

0.42

Correlation Coefficient

Humanwell Healthcare  Hygon Information

Very weak diversification

The 3 months correlation between Humanwell and Hygon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Humanwell Healthcare Group and Hygon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hygon Information 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 Hygon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hygon Information has no effect on the direction of Humanwell Healthcare i.e., Humanwell Healthcare and Hygon Information go up and down completely randomly.

Pair Corralation between Humanwell Healthcare and Hygon Information

Assuming the 90 days trading horizon Humanwell Healthcare is expected to generate 10.21 times less return on investment than Hygon Information. But when comparing it to its historical volatility, Humanwell Healthcare Group is 1.67 times less risky than Hygon Information. It trades about 0.0 of its potential returns per unit of risk. Hygon Information Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13,100  in Hygon Information Technology on October 9, 2024 and sell it today you would earn a total of  357.00  from holding Hygon Information Technology or generate 2.73% return on investment over 90 days.

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

Humanwell Healthcare Group  vs.  Hygon Information Technology

Humanwell Healthcare

Risk-Adjusted Performance

0 of 100

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 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.

Hygon Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hygon Information Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hygon Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Humanwell Healthcare and Hygon Information

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

The idea behind Humanwell Healthcare Group and Hygon Information Technology 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.