Correlation Between Medical Facilities and JD Health

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

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

Diversification Opportunities for Medical Facilities and JD Health

0.4

Correlation Coefficient

Medical Facilities  JD Health

Very weak diversification

The 3 months correlation between Medical and JDHIY is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and JD Health International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Health International and Medical Facilities 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 Medical Facilities are associated (or correlated) with JD Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Health International has no effect on the direction of Medical Facilities i.e., Medical Facilities and JD Health go up and down completely randomly.

Pair Corralation between Medical Facilities and JD Health

Assuming the 90 days horizon Medical Facilities is expected to generate 1.13 times more return on investment than JD Health. However, Medical Facilities is 1.13 times more volatile than JD Health International. It trades about 0.07 of its potential returns per unit of risk. JD Health International is currently generating about -0.07 per unit of risk. If you would invest  605.00  in Medical Facilities on October 5, 2024 and sell it today you would earn a total of  471.00  from holding Medical Facilities or generate 77.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.51%
Values	Daily Returns

Medical Facilities  vs.  JD Health International

Medical Facilities

Risk-Adjusted Performance

7 of 100

Insignificant

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

JD Health International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Health International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, JD Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medical Facilities and JD Health

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

The idea behind Medical Facilities and JD Health International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.