Correlation Between Healthcare and Sinomine Resource

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

By analyzing existing cross correlation between Healthcare Co and Sinomine Resource Exploration, you can compare the effects of market volatilities on Healthcare and Sinomine Resource 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 Healthcare with a short position of Sinomine Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare and Sinomine Resource.

Diversification Opportunities for Healthcare and Sinomine Resource

0.41

Correlation Coefficient

Healthcare  Sinomine Resource

Very weak diversification

The 3 months correlation between Healthcare and Sinomine is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Co and Sinomine Resource Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomine Resource and Healthcare 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 Healthcare Co are associated (or correlated) with Sinomine Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomine Resource has no effect on the direction of Healthcare i.e., Healthcare and Sinomine Resource go up and down completely randomly.

Pair Corralation between Healthcare and Sinomine Resource

Assuming the 90 days trading horizon Healthcare Co is expected to under-perform the Sinomine Resource. In addition to that, Healthcare is 1.03 times more volatile than Sinomine Resource Exploration. It trades about -0.16 of its total potential returns per unit of risk. Sinomine Resource Exploration is currently generating about 0.14 per unit of volatility. If you would invest  3,615  in Sinomine Resource Exploration on October 22, 2024 and sell it today you would earn a total of  217.00  from holding Sinomine Resource Exploration or generate 6.0% return on investment over 90 days.

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

Healthcare Co  vs.  Sinomine Resource Exploration

Healthcare

Risk-Adjusted Performance

0 of 100

Weak

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

Sinomine Resource

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinomine Resource Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinomine Resource sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare and Sinomine Resource

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

The idea behind Healthcare Co and Sinomine Resource Exploration 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.