Correlation Between TIANDE CHEMICAL and EHEALTH
Can any of the company-specific risk be diversified away by investing in both TIANDE CHEMICAL and EHEALTH 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 TIANDE CHEMICAL and EHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TIANDE CHEMICAL and EHEALTH, you can compare the effects of market volatilities on TIANDE CHEMICAL and EHEALTH 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 TIANDE CHEMICAL with a short position of EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIANDE CHEMICAL and EHEALTH.
Diversification Opportunities for TIANDE CHEMICAL and EHEALTH
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TIANDE and EHEALTH is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH and TIANDE CHEMICAL 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 TIANDE CHEMICAL are associated (or correlated) with EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and EHEALTH go up and down completely randomly.
Pair Corralation between TIANDE CHEMICAL and EHEALTH
Assuming the 90 days trading horizon TIANDE CHEMICAL is expected to generate 2.38 times less return on investment than EHEALTH. But when comparing it to its historical volatility, TIANDE CHEMICAL is 1.35 times less risky than EHEALTH. It trades about 0.12 of its potential returns per unit of risk. EHEALTH is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 358.00 in EHEALTH on September 26, 2024 and sell it today you would earn a total of 430.00 from holding EHEALTH or generate 120.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
TIANDE CHEMICAL vs. EHEALTH
Performance |
Timeline |
TIANDE CHEMICAL |
EHEALTH |
TIANDE CHEMICAL and EHEALTH Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TIANDE CHEMICAL and EHEALTH
The main advantage of trading using opposite TIANDE CHEMICAL and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIANDE CHEMICAL position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.TIANDE CHEMICAL vs. Apple Inc | TIANDE CHEMICAL vs. Apple Inc | TIANDE CHEMICAL vs. Microsoft | TIANDE CHEMICAL vs. Microsoft |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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