Correlation Between ONWARD MEDICAL and China Mobile

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

By analyzing existing cross correlation between ONWARD MEDICAL BV and China Life Insurance, you can compare the effects of market volatilities on ONWARD MEDICAL and China Mobile 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 ONWARD MEDICAL with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONWARD MEDICAL and China Mobile.

Diversification Opportunities for ONWARD MEDICAL and China Mobile

-0.4

Correlation Coefficient

ONWARD MEDICAL  China Mobile

Very good diversification

The 3 months correlation between ONWARD and China is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ONWARD MEDICAL BV and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and ONWARD 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 ONWARD MEDICAL BV are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of ONWARD MEDICAL i.e., ONWARD MEDICAL and China Mobile go up and down completely randomly.

Pair Corralation between ONWARD MEDICAL and China Mobile

Assuming the 90 days horizon ONWARD MEDICAL BV is expected to generate 3.07 times more return on investment than China Mobile. However, ONWARD MEDICAL is 3.07 times more volatile than China Life Insurance. It trades about 0.22 of its potential returns per unit of risk. China Life Insurance is currently generating about -0.36 per unit of risk. If you would invest  446.00  in ONWARD MEDICAL BV on October 11, 2024 and sell it today you would earn a total of  86.00  from holding ONWARD MEDICAL BV or generate 19.28% return on investment over 90 days.

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

ONWARD MEDICAL BV  vs.  China Life Insurance

ONWARD MEDICAL BV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ONWARD MEDICAL BV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONWARD MEDICAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

China Life Insurance

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Life Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Mobile is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ONWARD MEDICAL and China Mobile

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

The idea behind ONWARD MEDICAL BV and China Life Insurance 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.