Correlation Between Cowealth Medical and HOB Biotech

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

Diversification Opportunities for Cowealth Medical and HOB Biotech

0.38

Correlation Coefficient

Cowealth Medical  HOB Biotech

Weak diversification

The 3 months correlation between Cowealth and HOB is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cowealth Medical China and HOB Biotech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOB Biotech Group 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 HOB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOB Biotech Group has no effect on the direction of Cowealth Medical i.e., Cowealth Medical and HOB Biotech go up and down completely randomly.

Pair Corralation between Cowealth Medical and HOB Biotech

Assuming the 90 days trading horizon Cowealth Medical China is expected to generate 0.7 times more return on investment than HOB Biotech. However, Cowealth Medical China is 1.43 times less risky than HOB Biotech. It trades about -0.15 of its potential returns per unit of risk. HOB Biotech Group is currently generating about -0.14 per unit of risk. If you would invest  731.00  in Cowealth Medical China on October 22, 2024 and sell it today you would lose (46.00) from holding Cowealth Medical China or give up 6.29% of portfolio value over 90 days.

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

Cowealth Medical China  vs.  HOB Biotech Group

Cowealth Medical China

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cowealth Medical China are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

HOB Biotech Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HOB Biotech Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HOB Biotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cowealth Medical and HOB Biotech

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

The idea behind Cowealth Medical China and HOB Biotech 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.