Correlation Between New China and Eyebright Medical
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By analyzing existing cross correlation between New China Life and Eyebright Medical Technology, you can compare the effects of market volatilities on New China and Eyebright 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 New China with a short position of Eyebright Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Eyebright Medical.
Diversification Opportunities for New China and Eyebright Medical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Eyebright is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Eyebright Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyebright Medical and New China 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 New China Life are associated (or correlated) with Eyebright Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyebright Medical has no effect on the direction of New China i.e., New China and Eyebright Medical go up and down completely randomly.
Pair Corralation between New China and Eyebright Medical
Assuming the 90 days trading horizon New China Life is expected to generate 0.88 times more return on investment than Eyebright Medical. However, New China Life is 1.14 times less risky than Eyebright Medical. It trades about 0.23 of its potential returns per unit of risk. Eyebright Medical Technology is currently generating about 0.13 per unit of risk. If you would invest 4,577 in New China Life on September 26, 2024 and sell it today you would earn a total of 532.00 from holding New China Life or generate 11.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
New China Life vs. Eyebright Medical Technology
Performance |
Timeline |
New China Life |
Eyebright Medical |
New China and Eyebright Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New China and Eyebright Medical
The main advantage of trading using opposite New China and Eyebright Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Eyebright 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 Eyebright Medical will offset losses from the drop in Eyebright Medical's long position.New China vs. Kweichow Moutai Co | New China vs. Shenzhen Mindray Bio Medical | New China vs. Jiangsu Pacific Quartz | New China vs. G bits Network Technology |
Eyebright Medical vs. Great Sun Foods Co | Eyebright Medical vs. SUNSEA Telecommunications Co | Eyebright Medical vs. Guangdong Shenglu Telecommunication | Eyebright Medical vs. Guangxi Wuzhou Communications |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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