Correlation Between Chengtun Mining and Humanwell Healthcare

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

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

Diversification Opportunities for Chengtun Mining and Humanwell Healthcare

-0.31

Correlation Coefficient

Chengtun Mining  Humanwell Healthcare

Very good diversification

The 3 months correlation between Chengtun and Humanwell is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Humanwell Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humanwell Healthcare and Chengtun Mining 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 Chengtun Mining Group are associated (or correlated) with Humanwell Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humanwell Healthcare has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Humanwell Healthcare go up and down completely randomly.

Pair Corralation between Chengtun Mining and Humanwell Healthcare

Assuming the 90 days trading horizon Chengtun Mining Group is expected to generate 0.84 times more return on investment than Humanwell Healthcare. However, Chengtun Mining Group is 1.19 times less risky than Humanwell Healthcare. It trades about 0.08 of its potential returns per unit of risk. Humanwell Healthcare Group is currently generating about 0.04 per unit of risk. If you would invest  476.00  in Chengtun Mining Group on October 23, 2024 and sell it today you would earn a total of  39.00  from holding Chengtun Mining Group or generate 8.19% return on investment over 90 days.

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

Chengtun Mining Group  vs.  Humanwell Healthcare Group

Chengtun Mining Group

Risk-Adjusted Performance

5 of 100

Modest

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

Humanwell Healthcare

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Chengtun Mining and Humanwell Healthcare

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

The idea behind Chengtun Mining Group and Humanwell Healthcare 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.