Correlation Between Ryman Healthcare and Wenzhou Kangning

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

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

Diversification Opportunities for Ryman Healthcare and Wenzhou Kangning

0.8

Correlation Coefficient

Ryman Healthcare  Wenzhou Kangning

Very poor diversification

The 3 months correlation between Ryman and Wenzhou is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ryman Healthcare Limited 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 Ryman Healthcare 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 Ryman Healthcare Limited 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 Ryman Healthcare i.e., Ryman Healthcare and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between Ryman Healthcare and Wenzhou Kangning

Assuming the 90 days horizon Ryman Healthcare Limited is expected to under-perform the Wenzhou Kangning. In addition to that, Ryman Healthcare is 1.72 times more volatile than Wenzhou Kangning Hospital. It trades about -0.14 of its total potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.24 per unit of volatility. If you would invest  153.00  in Wenzhou Kangning Hospital on December 21, 2024 and sell it today you would lose (52.00) from holding Wenzhou Kangning Hospital or give up 33.99% of portfolio value over 90 days.

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

Ryman Healthcare Limited  vs.  Wenzhou Kangning Hospital

Ryman Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryman Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 fragile 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 Ryman Healthcare and Wenzhou Kangning

The main advantage of trading using opposite Ryman Healthcare and Wenzhou Kangning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryman Healthcare 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 Ryman Healthcare Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.