Correlation Between Huaizhong Health and IFAN Financial

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

By analyzing existing cross correlation between Huaizhong Health Group and IFAN Financial, you can compare the effects of market volatilities on Huaizhong Health and IFAN Financial 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 Huaizhong Health with a short position of IFAN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaizhong Health and IFAN Financial.

Diversification Opportunities for Huaizhong Health and IFAN Financial

0.0

Correlation Coefficient

Huaizhong Health  IFAN Financial

Pay attention - limited upside

The 3 months correlation between Huaizhong and IFAN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Huaizhong Health Group and IFAN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IFAN Financial and Huaizhong Health 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 Huaizhong Health Group are associated (or correlated) with IFAN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IFAN Financial has no effect on the direction of Huaizhong Health i.e., Huaizhong Health and IFAN Financial go up and down completely randomly.

Pair Corralation between Huaizhong Health and IFAN Financial

If you would invest  0.02  in IFAN Financial on December 20, 2024 and sell it today you would lose (0.01) from holding IFAN Financial or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Huaizhong Health Group  vs.  IFAN Financial

Huaizhong Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huaizhong Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Huaizhong Health is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

IFAN Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IFAN Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, IFAN Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huaizhong Health and IFAN Financial

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

The idea behind Huaizhong Health Group and IFAN Financial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.