Correlation Between China Health and SavMobi Technology

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

Diversification Opportunities for China Health and SavMobi Technology

-0.36

Correlation Coefficient

China Health  SavMobi Technology

Very good diversification

The 3 months correlation between China and SavMobi is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and SavMobi Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SavMobi Technology 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 SavMobi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SavMobi Technology has no effect on the direction of China Health i.e., China Health and SavMobi Technology go up and down completely randomly.

Pair Corralation between China Health and SavMobi Technology

Given the investment horizon of 90 days China Health Management is expected to under-perform the SavMobi Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, China Health Management is 4.84 times less risky than SavMobi Technology. The pink sheet trades about -0.21 of its potential returns per unit of risk. The SavMobi Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  200.00  in SavMobi Technology on September 30, 2024 and sell it today you would earn a total of  63.00  from holding SavMobi Technology or generate 31.5% 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.  SavMobi Technology

China Health Management

Risk-Adjusted Performance

0 of 100

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.

SavMobi Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SavMobi Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, SavMobi Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Health and SavMobi Technology

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

The idea behind China Health Management and SavMobi Technology 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.