Correlation Between Nuode Investment and Hengkang Medical

Can any of the company-specific risk be diversified away by investing in both Nuode Investment and Hengkang Medical 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 Nuode Investment and Hengkang Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nuode Investment Co and Hengkang Medical Group, you can compare the effects of market volatilities on Nuode Investment and Hengkang Medical 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 Nuode Investment with a short position of Hengkang Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuode Investment and Hengkang Medical.

Diversification Opportunities for Nuode Investment and Hengkang Medical

0.65

Correlation Coefficient

Nuode Investment  Hengkang Medical

Poor diversification

The 3 months correlation between Nuode and Hengkang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nuode Investment Co and Hengkang Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengkang Medical and Nuode Investment 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 Nuode Investment Co are associated (or correlated) with Hengkang Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengkang Medical has no effect on the direction of Nuode Investment i.e., Nuode Investment and Hengkang Medical go up and down completely randomly.

Pair Corralation between Nuode Investment and Hengkang Medical

Assuming the 90 days trading horizon Nuode Investment Co is expected to under-perform the Hengkang Medical. But the stock apears to be less risky and, when comparing its historical volatility, Nuode Investment Co is 2.05 times less risky than Hengkang Medical. The stock trades about -0.21 of its potential returns per unit of risk. The Hengkang Medical Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  273.00  in Hengkang Medical Group on October 24, 2024 and sell it today you would lose (26.00) from holding Hengkang Medical Group or give up 9.52% of portfolio value over 90 days.

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

Nuode Investment Co  vs.  Hengkang Medical Group

Nuode Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuode Investment Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nuode Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hengkang Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hengkang Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hengkang Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuode Investment and Hengkang Medical

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

The idea behind Nuode Investment Co and Hengkang Medical Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.