Correlation Between Power Wind and SS Healthcare

Can any of the company-specific risk be diversified away by investing in both Power Wind and SS 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 Power Wind and SS Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Power Wind Health and SS Healthcare Holding, you can compare the effects of market volatilities on Power Wind and SS 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 Power Wind with a short position of SS Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Wind and SS Healthcare.

Diversification Opportunities for Power Wind and SS Healthcare

0.29

Correlation Coefficient

Power Wind  SS Healthcare

Modest diversification

The 3 months correlation between Power and 4198 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and SS Healthcare Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS Healthcare Holding and Power Wind 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 Power Wind Health are associated (or correlated) with SS Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS Healthcare Holding has no effect on the direction of Power Wind i.e., Power Wind and SS Healthcare go up and down completely randomly.

Pair Corralation between Power Wind and SS Healthcare

Assuming the 90 days trading horizon Power Wind is expected to generate 10.97 times less return on investment than SS Healthcare. But when comparing it to its historical volatility, Power Wind Health is 2.1 times less risky than SS Healthcare. It trades about 0.01 of its potential returns per unit of risk. SS Healthcare Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,175  in SS Healthcare Holding on December 2, 2024 and sell it today you would earn a total of  75.00  from holding SS Healthcare Holding or generate 2.36% return on investment over 90 days.

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

Power Wind Health  vs.  SS Healthcare Holding

Power Wind Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Wind Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Power Wind is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SS Healthcare Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SS Healthcare Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, SS Healthcare is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Power Wind and SS Healthcare

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

The idea behind Power Wind Health and SS Healthcare Holding 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.