Correlation Between Kweichow Moutai and Healthcare

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

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

Diversification Opportunities for Kweichow Moutai and Healthcare

-0.07

Correlation Coefficient

Kweichow Moutai  Healthcare

Good diversification

The 3 months correlation between Kweichow and Healthcare is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare and Kweichow Moutai 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 Kweichow Moutai Co are associated (or correlated) with Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and Healthcare go up and down completely randomly.

Pair Corralation between Kweichow Moutai and Healthcare

Assuming the 90 days trading horizon Kweichow Moutai Co is expected to generate 0.76 times more return on investment than Healthcare. However, Kweichow Moutai Co is 1.31 times less risky than Healthcare. It trades about 0.05 of its potential returns per unit of risk. Healthcare Co is currently generating about -0.11 per unit of risk. If you would invest  152,500  in Kweichow Moutai Co on December 29, 2024 and sell it today you would earn a total of  6,021  from holding Kweichow Moutai Co or generate 3.95% return on investment over 90 days.

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

Kweichow Moutai Co  vs.  Healthcare Co

Kweichow Moutai

Risk-Adjusted Performance

Insignificant

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

Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthcare Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kweichow Moutai and Healthcare

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

The idea behind Kweichow Moutai Co and Healthcare Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.