Correlation Between Changchun Engley and Heren Health

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

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

Diversification Opportunities for Changchun Engley and Heren Health

0.96

Correlation Coefficient

Changchun Engley  Heren Health

Almost no diversification

The 3 months correlation between Changchun and Heren is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Changchun Engley Automobile and Heren Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heren Health and Changchun Engley 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 Changchun Engley Automobile are associated (or correlated) with Heren Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heren Health has no effect on the direction of Changchun Engley i.e., Changchun Engley and Heren Health go up and down completely randomly.

Pair Corralation between Changchun Engley and Heren Health

Assuming the 90 days trading horizon Changchun Engley is expected to generate 1.67 times less return on investment than Heren Health. But when comparing it to its historical volatility, Changchun Engley Automobile is 1.43 times less risky than Heren Health. It trades about 0.14 of its potential returns per unit of risk. Heren Health Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,012  in Heren Health Co on September 2, 2024 and sell it today you would earn a total of  446.00  from holding Heren Health Co or generate 44.07% return on investment over 90 days.

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

Changchun Engley Automobile  vs.  Heren Health Co

Changchun Engley Aut

Risk-Adjusted Performance

10 of 100

OK

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

Heren Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heren Health Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heren Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Changchun Engley and Heren Health

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

The idea behind Changchun Engley Automobile and Heren Health 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.