Correlation Between China Health and Zedcor

Can any of the company-specific risk be diversified away by investing in both China Health and Zedcor 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 Zedcor 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 Zedcor Inc, you can compare the effects of market volatilities on China Health and Zedcor 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 Zedcor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and Zedcor.

Diversification Opportunities for China Health and Zedcor

-0.18

Correlation Coefficient

China Health  Zedcor

Good diversification

The 3 months correlation between China and Zedcor is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and Zedcor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedcor Inc 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 Zedcor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedcor Inc has no effect on the direction of China Health i.e., China Health and Zedcor go up and down completely randomly.

Pair Corralation between China Health and Zedcor

Given the investment horizon of 90 days China Health Management is expected to under-perform the Zedcor. In addition to that, China Health is 1.39 times more volatile than Zedcor Inc. It trades about -0.26 of its total potential returns per unit of risk. Zedcor Inc is currently generating about 0.28 per unit of volatility. If you would invest  229.00  in Zedcor Inc on October 10, 2024 and sell it today you would earn a total of  29.00  from holding Zedcor Inc or generate 12.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

China Health Management  vs.  Zedcor Inc

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 rather sound technical indicators, China Health is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Zedcor Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zedcor Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Zedcor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Health and Zedcor

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

The idea behind China Health Management and Zedcor Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.