Correlation Between Cowealth Medical and Humanwell Healthcare

Can any of the company-specific risk be diversified away by investing in both Cowealth Medical and Humanwell 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 Cowealth Medical and Humanwell Healthcare 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 Humanwell Healthcare Group, you can compare the effects of market volatilities on Cowealth Medical and Humanwell 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 Cowealth Medical with a short position of Humanwell Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cowealth Medical and Humanwell Healthcare.

Diversification Opportunities for Cowealth Medical and Humanwell Healthcare

-0.02

Correlation Coefficient

Cowealth Medical  Humanwell Healthcare

Good diversification

The 3 months correlation between Cowealth and Humanwell is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cowealth Medical China and Humanwell Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humanwell Healthcare 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 Humanwell Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humanwell Healthcare has no effect on the direction of Cowealth Medical i.e., Cowealth Medical and Humanwell Healthcare go up and down completely randomly.

Pair Corralation between Cowealth Medical and Humanwell Healthcare

Assuming the 90 days trading horizon Cowealth Medical China is expected to generate 0.96 times more return on investment than Humanwell Healthcare. However, Cowealth Medical China is 1.04 times less risky than Humanwell Healthcare. It trades about -0.01 of its potential returns per unit of risk. Humanwell Healthcare Group is currently generating about -0.08 per unit of risk. If you would invest  725.00  in Cowealth Medical China on December 27, 2024 and sell it today you would lose (16.00) from holding Cowealth Medical China or give up 2.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Cowealth Medical China  vs.  Humanwell Healthcare Group

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.

Humanwell Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humanwell Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cowealth Medical and Humanwell Healthcare

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

The idea behind Cowealth Medical China and Humanwell Healthcare Group 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.