Correlation Between China Health and Kambi Group

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

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

Diversification Opportunities for China Health and Kambi Group

0.69

Correlation Coefficient

China Health  Kambi Group

Poor diversification

The 3 months correlation between China and Kambi is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Health Industries and Kambi Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kambi Group plc and China 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 China Health Industries are associated (or correlated) with Kambi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kambi Group plc has no effect on the direction of China Health i.e., China Health and Kambi Group go up and down completely randomly.

Pair Corralation between China Health and Kambi Group

Given the investment horizon of 90 days China Health Industries is expected to generate 0.98 times more return on investment than Kambi Group. However, China Health Industries is 1.02 times less risky than Kambi Group. It trades about -0.14 of its potential returns per unit of risk. Kambi Group plc is currently generating about -0.22 per unit of risk. If you would invest  33.00  in China Health Industries on September 27, 2024 and sell it today you would lose (5.00) from holding China Health Industries or give up 15.15% of portfolio value over 90 days.

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

China Health Industries  vs.  Kambi Group plc

China Health Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Health Industries 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 technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kambi Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kambi Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with China Health and Kambi Group

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

The idea behind China Health Industries and Kambi Group plc 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.