Correlation Between Southern PublishingMedia and Dezhan HealthCare

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Can any of the company-specific risk be diversified away by investing in both Southern PublishingMedia and Dezhan 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 Southern PublishingMedia and Dezhan HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern PublishingMedia Co and Dezhan HealthCare Co, you can compare the effects of market volatilities on Southern PublishingMedia and Dezhan 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 Southern PublishingMedia with a short position of Dezhan HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern PublishingMedia and Dezhan HealthCare.

Diversification Opportunities for Southern PublishingMedia and Dezhan HealthCare

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Southern and Dezhan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Southern PublishingMedia Co and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare and Southern PublishingMedia 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 Southern PublishingMedia Co are associated (or correlated) with Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of Southern PublishingMedia i.e., Southern PublishingMedia and Dezhan HealthCare go up and down completely randomly.

Pair Corralation between Southern PublishingMedia and Dezhan HealthCare

Assuming the 90 days trading horizon Southern PublishingMedia Co is expected to generate 1.01 times more return on investment than Dezhan HealthCare. However, Southern PublishingMedia is 1.01 times more volatile than Dezhan HealthCare Co. It trades about 0.04 of its potential returns per unit of risk. Dezhan HealthCare Co is currently generating about 0.02 per unit of risk. If you would invest  1,218  in Southern PublishingMedia Co on October 10, 2024 and sell it today you would earn a total of  220.00  from holding Southern PublishingMedia Co or generate 18.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Southern PublishingMedia Co  vs.  Dezhan HealthCare Co

 Performance 
       Timeline  
Southern PublishingMedia 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Southern PublishingMedia Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Southern PublishingMedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dezhan HealthCare 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dezhan HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.

Southern PublishingMedia and Dezhan HealthCare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Southern PublishingMedia and Dezhan HealthCare

The main advantage of trading using opposite Southern PublishingMedia and Dezhan HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern PublishingMedia position performs unexpectedly, Dezhan 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 Dezhan HealthCare will offset losses from the drop in Dezhan HealthCare's long position.
The idea behind Southern PublishingMedia Co and Dezhan 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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