Correlation Between Zhongyin Babi and Heren Health

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

By analyzing existing cross correlation between Zhongyin Babi Food and Heren Health Co, you can compare the effects of market volatilities on Zhongyin Babi 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 Zhongyin Babi with a short position of Heren Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongyin Babi and Heren Health.

Diversification Opportunities for Zhongyin Babi and Heren Health

0.39

Correlation Coefficient

Zhongyin Babi  Heren Health

Weak diversification

The 3 months correlation between Zhongyin and Heren is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Zhongyin Babi Food and Heren Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heren Health and Zhongyin Babi 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 Zhongyin Babi Food 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 Zhongyin Babi i.e., Zhongyin Babi and Heren Health go up and down completely randomly.

Pair Corralation between Zhongyin Babi and Heren Health

Assuming the 90 days trading horizon Zhongyin Babi Food is expected to under-perform the Heren Health. But the stock apears to be less risky and, when comparing its historical volatility, Zhongyin Babi Food is 1.02 times less risky than Heren Health. The stock trades about -0.08 of its potential returns per unit of risk. The Heren Health Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,409  in Heren Health Co on October 11, 2024 and sell it today you would lose (100.00) from holding Heren Health Co or give up 7.1% of portfolio value over 90 days.

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

Zhongyin Babi Food  vs.  Heren Health Co

Zhongyin Babi Food

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongyin Babi Food are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongyin Babi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Heren Health

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heren Health Co are ranked lower than 3 (%) 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 Zhongyin Babi and Heren Health

The main advantage of trading using opposite Zhongyin Babi and Heren Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongyin Babi 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 Zhongyin Babi Food 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.