Correlation Between Zhongtong Guomai and Heren Health

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

Diversification Opportunities for Zhongtong Guomai and Heren Health

0.47

Correlation Coefficient

Zhongtong Guomai  Heren Health

Very weak diversification

The 3 months correlation between Zhongtong and Heren is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Zhongtong Guomai Communication and Heren Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heren Health 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 Heren Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heren Health has no effect on the direction of Zhongtong Guomai i.e., Zhongtong Guomai and Heren Health go up and down completely randomly.

Pair Corralation between Zhongtong Guomai and Heren Health

Assuming the 90 days trading horizon Zhongtong Guomai Communication is expected to generate 1.01 times more return on investment than Heren Health. However, Zhongtong Guomai is 1.01 times more volatile than Heren Health Co. It trades about 0.12 of its potential returns per unit of risk. Heren Health Co is currently generating about 0.06 per unit of risk. If you would invest  470.00  in Zhongtong Guomai Communication on October 9, 2024 and sell it today you would earn a total of  481.00  from holding Zhongtong Guomai Communication or generate 102.34% return on investment over 90 days.

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

Zhongtong Guomai Communication  vs.  Heren Health Co

Zhongtong Guomai Com

Risk-Adjusted Performance

7 of 100

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.

Heren Health

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heren Health Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heren Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zhongtong Guomai and Heren Health

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

The idea behind Zhongtong Guomai Communication and Heren Health Co 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..