Correlation Between AECOM and Wenzhou Kangning

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

By analyzing existing cross correlation between AECOM and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on AECOM and Wenzhou Kangning 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 AECOM with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM and Wenzhou Kangning.

Diversification Opportunities for AECOM and Wenzhou Kangning

-0.08

Correlation Coefficient

AECOM  Wenzhou Kangning

Good diversification

The 3 months correlation between AECOM and Wenzhou is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding AECOM and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and AECOM 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 AECOM are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of AECOM i.e., AECOM and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between AECOM and Wenzhou Kangning

Assuming the 90 days horizon AECOM is expected to generate 2.16 times less return on investment than Wenzhou Kangning. But when comparing it to its historical volatility, AECOM is 1.89 times less risky than Wenzhou Kangning. It trades about 0.04 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Wenzhou Kangning Hospital on October 26, 2024 and sell it today you would earn a total of  52.00  from holding Wenzhou Kangning Hospital or generate 62.65% return on investment over 90 days.

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

AECOM  vs.  Wenzhou Kangning Hospital

AECOM

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AECOM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wenzhou Kangning Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wenzhou Kangning Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AECOM and Wenzhou Kangning

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

The idea behind AECOM and Wenzhou Kangning Hospital 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.