Correlation Between Sino Medical and Dezhan HealthCare

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

By analyzing existing cross correlation between Sino Medical Sciences and Dezhan HealthCare Co, you can compare the effects of market volatilities on Sino Medical and Dezhan HealthCare 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 Sino Medical with a short position of Dezhan HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Medical and Dezhan HealthCare.

Diversification Opportunities for Sino Medical and Dezhan HealthCare

0.35

Correlation Coefficient

Sino Medical  Dezhan HealthCare

Weak diversification

The 3 months correlation between Sino and Dezhan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sino Medical Sciences and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare and Sino 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 Sino Medical Sciences are associated (or correlated) with Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of Sino Medical i.e., Sino Medical and Dezhan HealthCare go up and down completely randomly.

Pair Corralation between Sino Medical and Dezhan HealthCare

Assuming the 90 days trading horizon Sino Medical is expected to generate 1.29 times less return on investment than Dezhan HealthCare. In addition to that, Sino Medical is 1.12 times more volatile than Dezhan HealthCare Co. It trades about 0.02 of its total potential returns per unit of risk. Dezhan HealthCare Co is currently generating about 0.02 per unit of volatility. If you would invest  291.00  in Dezhan HealthCare Co on October 4, 2024 and sell it today you would earn a total of  22.00  from holding Dezhan HealthCare Co or generate 7.56% return on investment over 90 days.

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

Sino Medical Sciences  vs.  Dezhan HealthCare Co

Sino Medical Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino Medical Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dezhan HealthCare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dezhan HealthCare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sino Medical and Dezhan HealthCare

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

The idea behind Sino Medical Sciences and Dezhan HealthCare 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.