Correlation Between Space Communication and China Health

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

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

Diversification Opportunities for Space Communication and China Health

0.0

Correlation Coefficient

Space Communication  China Health

Pay attention - limited upside

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

Pair Corralation between Space Communication and China Health

Assuming the 90 days horizon Space Communication is expected to under-perform the China Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Space Communication is 10.07 times less risky than China Health. The pink sheet trades about -0.04 of its potential returns per unit of risk. The China Health Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12.00  in China Health Industries on October 22, 2024 and sell it today you would earn a total of  8.00  from holding China Health Industries or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Space Communication  vs.  China Health Industries

Space Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Space Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

China Health Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Health Industries 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 technical indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Space Communication and China Health

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

The idea behind Space Communication and China Health Industries 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.