Correlation Between Compagnie and Wenzhou Kangning

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

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

Diversification Opportunities for Compagnie and Wenzhou Kangning

-0.91

Correlation Coefficient

Compagnie  Wenzhou Kangning

Pay attention - limited upside

The 3 months correlation between Compagnie and Wenzhou is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain 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 Compagnie 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 Compagnie de Saint Gobain 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 Compagnie i.e., Compagnie and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between Compagnie and Wenzhou Kangning

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.88 times more return on investment than Wenzhou Kangning. However, Compagnie de Saint Gobain is 1.14 times less risky than Wenzhou Kangning. It trades about 0.12 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.24 per unit of risk. If you would invest  8,504  in Compagnie de Saint Gobain on December 23, 2024 and sell it today you would earn a total of  1,492  from holding Compagnie de Saint Gobain or generate 17.54% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Wenzhou Kangning Hospital

Compagnie de Saint

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Wenzhou Kangning Hospital

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Compagnie and Wenzhou Kangning

The main advantage of trading using opposite Compagnie and Wenzhou Kangning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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 Compagnie de Saint Gobain 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.