Correlation Between Zhongtong Guomai and Meinian Onehealth

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

Diversification Opportunities for Zhongtong Guomai and Meinian Onehealth

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Zhongtong and Meinian is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Zhongtong Guomai Communication and Meinian Onehealth Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meinian Onehealth and Zhongtong Guomai 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 Zhongtong Guomai Communication are associated (or correlated) with Meinian Onehealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meinian Onehealth has no effect on the direction of Zhongtong Guomai i.e., Zhongtong Guomai and Meinian Onehealth go up and down completely randomly.

Pair Corralation between Zhongtong Guomai and Meinian Onehealth

Assuming the 90 days trading horizon Zhongtong Guomai Communication is expected to generate 3.63 times more return on investment than Meinian Onehealth. However, Zhongtong Guomai is 3.63 times more volatile than Meinian Onehealth Healthcare. It trades about -0.08 of its potential returns per unit of risk. Meinian Onehealth Healthcare is currently generating about -0.36 per unit of risk. If you would invest  1,130  in Zhongtong Guomai Communication on October 9, 2024 and sell it today you would lose (179.00) from holding Zhongtong Guomai Communication or give up 15.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Zhongtong Guomai Communication  vs.  Meinian Onehealth Healthcare

 Performance 
       Timeline  
Zhongtong Guomai Com 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zhongtong Guomai Communication are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongtong Guomai sustained solid returns over the last few months and may actually be approaching a breakup point.
Meinian Onehealth 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Meinian Onehealth Healthcare are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Meinian Onehealth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhongtong Guomai and Meinian Onehealth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhongtong Guomai and Meinian Onehealth

The main advantage of trading using opposite Zhongtong Guomai and Meinian Onehealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongtong Guomai position performs unexpectedly, Meinian Onehealth 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 Meinian Onehealth will offset losses from the drop in Meinian Onehealth's long position.
The idea behind Zhongtong Guomai Communication and Meinian Onehealth Healthcare 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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