Correlation Between Ebro Foods and Wenzhou Kangning

Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Wenzhou Kangning 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 Ebro Foods and Wenzhou Kangning into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ebro Foods SA and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on Ebro Foods and Wenzhou Kangning 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 Ebro Foods with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Wenzhou Kangning.

Diversification Opportunities for Ebro Foods and Wenzhou Kangning

-0.82

Correlation Coefficient

Ebro Foods  Wenzhou Kangning

Pay attention - limited upside

The 3 months correlation between Ebro and Wenzhou is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and Ebro Foods 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 Ebro Foods SA are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of Ebro Foods i.e., Ebro Foods and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between Ebro Foods and Wenzhou Kangning

Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.38 times more return on investment than Wenzhou Kangning. However, Ebro Foods SA is 2.65 times less risky than Wenzhou Kangning. It trades about 0.07 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.22 per unit of risk. If you would invest  1,574  in Ebro Foods SA on December 20, 2024 and sell it today you would earn a total of  64.00  from holding Ebro Foods SA or generate 4.07% return on investment over 90 days.

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

Ebro Foods SA  vs.  Wenzhou Kangning Hospital

Ebro Foods SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ebro Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Wenzhou Kangning Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wenzhou Kangning Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ebro Foods and Wenzhou Kangning

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

The idea behind Ebro Foods SA and Wenzhou Kangning Hospital 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .