Correlation Between Cowealth Medical and By Health

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

By analyzing existing cross correlation between Cowealth Medical China and By health, you can compare the effects of market volatilities on Cowealth Medical and By 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 Cowealth Medical with a short position of By Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cowealth Medical and By Health.

Diversification Opportunities for Cowealth Medical and By Health

0.61

Correlation Coefficient

Cowealth Medical  By Health

Poor diversification

The 3 months correlation between Cowealth and 300146 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cowealth Medical China and By health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on By health and Cowealth Medical 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 Cowealth Medical China are associated (or correlated) with By Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of By health has no effect on the direction of Cowealth Medical i.e., Cowealth Medical and By Health go up and down completely randomly.

Pair Corralation between Cowealth Medical and By Health

Assuming the 90 days trading horizon Cowealth Medical China is expected to generate 1.61 times more return on investment than By Health. However, Cowealth Medical is 1.61 times more volatile than By health. It trades about -0.01 of its potential returns per unit of risk. By health is currently generating about -0.04 per unit of risk. If you would invest  721.00  in Cowealth Medical China on December 26, 2024 and sell it today you would lose (21.00) from holding Cowealth Medical China or give up 2.91% of portfolio value over 90 days.

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

Cowealth Medical China  vs.  By health

Cowealth Medical China

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cowealth Medical China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cowealth Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

By health

Risk-Adjusted Performance

Very Weak

Over the last 90 days By health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, By Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cowealth Medical and By Health

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

The idea behind Cowealth Medical China and By health 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.