Correlation Between China Jo and Allstar Health

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

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

Diversification Opportunities for China Jo and Allstar Health

0.19

Correlation Coefficient

China Jo  Allstar Health

Average diversification

The 3 months correlation between China and Allstar is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and Allstar Health Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstar Health Brands and China Jo 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 Jo Jo Drugstores are associated (or correlated) with Allstar Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstar Health Brands has no effect on the direction of China Jo i.e., China Jo and Allstar Health go up and down completely randomly.

Pair Corralation between China Jo and Allstar Health

Given the investment horizon of 90 days China Jo Jo Drugstores is expected to under-perform the Allstar Health. But the stock apears to be less risky and, when comparing its historical volatility, China Jo Jo Drugstores is 1.85 times less risky than Allstar Health. The stock trades about -0.05 of its potential returns per unit of risk. The Allstar Health Brands is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Allstar Health Brands on December 28, 2024 and sell it today you would lose (0.02) from holding Allstar Health Brands or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.13%
Values	Daily Returns

China Jo Jo Drugstores  vs.  Allstar Health Brands

China Jo Jo

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Jo Jo Drugstores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Allstar Health Brands

Risk-Adjusted Performance

Weak

Over the last 90 days Allstar Health Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allstar Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with China Jo and Allstar Health

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

The idea behind China Jo Jo Drugstores and Allstar Health Brands 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.