Correlation Between Healthcare Triangle and Zhongchao

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

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

Diversification Opportunities for Healthcare Triangle and Zhongchao

-0.23

Correlation Coefficient

Healthcare Triangle  Zhongchao

Very good diversification

The 3 months correlation between Healthcare and Zhongchao is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Triangle and Zhongchao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongchao and Healthcare Triangle 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 Healthcare Triangle are associated (or correlated) with Zhongchao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongchao has no effect on the direction of Healthcare Triangle i.e., Healthcare Triangle and Zhongchao go up and down completely randomly.

Pair Corralation between Healthcare Triangle and Zhongchao

Given the investment horizon of 90 days Healthcare Triangle is expected to generate 2.57 times more return on investment than Zhongchao. However, Healthcare Triangle is 2.57 times more volatile than Zhongchao. It trades about 0.1 of its potential returns per unit of risk. Zhongchao is currently generating about -0.12 per unit of risk. If you would invest  76.00  in Healthcare Triangle on October 26, 2024 and sell it today you would earn a total of  8.00  from holding Healthcare Triangle or generate 10.53% return on investment over 90 days.

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

Healthcare Triangle  vs.  Zhongchao

Healthcare Triangle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Triangle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Healthcare Triangle is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Zhongchao

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongchao are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Zhongchao exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Triangle and Zhongchao

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

The idea behind Healthcare Triangle and Zhongchao 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.