Correlation Between Ningbo Thermal and Meinian Onehealth

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

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

Diversification Opportunities for Ningbo Thermal and Meinian Onehealth

0.64

Correlation Coefficient

Ningbo Thermal  Meinian Onehealth

Poor diversification

The 3 months correlation between Ningbo and Meinian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Thermal Power and Meinian Onehealth Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meinian Onehealth and Ningbo Thermal 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 Ningbo Thermal Power are associated (or correlated) with Meinian Onehealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meinian Onehealth has no effect on the direction of Ningbo Thermal i.e., Ningbo Thermal and Meinian Onehealth go up and down completely randomly.

Pair Corralation between Ningbo Thermal and Meinian Onehealth

Assuming the 90 days trading horizon Ningbo Thermal Power is expected to generate 0.88 times more return on investment than Meinian Onehealth. However, Ningbo Thermal Power is 1.13 times less risky than Meinian Onehealth. It trades about 0.01 of its potential returns per unit of risk. Meinian Onehealth Healthcare is currently generating about -0.01 per unit of risk. If you would invest  419.00  in Ningbo Thermal Power on September 26, 2024 and sell it today you would earn a total of  18.00  from holding Ningbo Thermal Power or generate 4.3% return on investment over 90 days.

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

Ningbo Thermal Power  vs.  Meinian Onehealth Healthcare

Ningbo Thermal Power

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Thermal Power are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Thermal sustained solid returns over the last few months and may actually be approaching a breakup point.

Meinian Onehealth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meinian Onehealth Healthcare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meinian Onehealth sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningbo Thermal and Meinian Onehealth

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

The idea behind Ningbo Thermal Power and Meinian Onehealth Healthcare 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.