Correlation Between China Health and Pioneer High

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

Diversification Opportunities for China Health and Pioneer High

0.2

Correlation Coefficient

China Health  Pioneer High

Modest diversification

The 3 months correlation between China and Pioneer is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and Pioneer High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer High Income 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 Pioneer High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer High Income has no effect on the direction of China Health i.e., China Health and Pioneer High go up and down completely randomly.

Pair Corralation between China Health and Pioneer High

Given the investment horizon of 90 days China Health Management is expected to generate 27.64 times more return on investment than Pioneer High. However, China Health is 27.64 times more volatile than Pioneer High Income. It trades about 0.08 of its potential returns per unit of risk. Pioneer High Income is currently generating about 0.04 per unit of risk. If you would invest  0.40  in China Health Management on December 25, 2024 and sell it today you would earn a total of  0.09  from holding China Health Management or generate 22.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

China Health Management  vs.  Pioneer High Income

China Health Management

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Health Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, China Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pioneer High Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer High Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Pioneer High is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with China Health and Pioneer High

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

The idea behind China Health Management and Pioneer High Income 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 Stocks Directory module to find actively traded stocks across global markets.