Correlation Between Fidus Investment and Huaizhong Health

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

By analyzing existing cross correlation between Fidus Investment Corp and Huaizhong Health Group, you can compare the effects of market volatilities on Fidus Investment and Huaizhong Health 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 Fidus Investment with a short position of Huaizhong Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and Huaizhong Health.

Diversification Opportunities for Fidus Investment and Huaizhong Health

0.0

Correlation Coefficient

Fidus Investment  Huaizhong Health

Pay attention - limited upside

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

Pair Corralation between Fidus Investment and Huaizhong Health

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.18 times more return on investment than Huaizhong Health. However, Fidus Investment Corp is 5.61 times less risky than Huaizhong Health. It trades about 0.07 of its potential returns per unit of risk. Huaizhong Health Group is currently generating about -0.03 per unit of risk. If you would invest  1,614  in Fidus Investment Corp on October 24, 2024 and sell it today you would earn a total of  575.00  from holding Fidus Investment Corp or generate 35.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Fidus Investment Corp  vs.  Huaizhong Health Group

Fidus Investment Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fidus Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Huaizhong Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaizhong Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Huaizhong Health is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidus Investment and Huaizhong Health

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

The idea behind Fidus Investment Corp and Huaizhong Health Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.