Correlation Between China Health and Alpha Wastewater

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

By analyzing existing cross correlation between China Health Management and Alpha Wastewater, you can compare the effects of market volatilities on China Health and Alpha Wastewater 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 Alpha Wastewater. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and Alpha Wastewater.

Diversification Opportunities for China Health and Alpha Wastewater

0.0

Correlation Coefficient

China Health  Alpha Wastewater

Pay attention - limited upside

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

Pair Corralation between China Health and Alpha Wastewater

If you would invest  0.08  in Alpha Wastewater on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Alpha Wastewater or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Health Management  vs.  Alpha Wastewater

China Health Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Health Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

Alpha Wastewater

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Wastewater has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Alpha Wastewater is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with China Health and Alpha Wastewater

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

The idea behind China Health Management and Alpha Wastewater 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.