Correlation Between Dezhan HealthCare and Anhui Gujing

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Can any of the company-specific risk be diversified away by investing in both Dezhan HealthCare and Anhui Gujing 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 Dezhan HealthCare and Anhui Gujing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dezhan HealthCare Co and Anhui Gujing Distillery, you can compare the effects of market volatilities on Dezhan HealthCare and Anhui Gujing 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 Dezhan HealthCare with a short position of Anhui Gujing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dezhan HealthCare and Anhui Gujing.

Diversification Opportunities for Dezhan HealthCare and Anhui Gujing

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Dezhan and Anhui is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dezhan HealthCare Co and Anhui Gujing Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Gujing Distillery and Dezhan 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 Dezhan HealthCare Co are associated (or correlated) with Anhui Gujing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Gujing Distillery has no effect on the direction of Dezhan HealthCare i.e., Dezhan HealthCare and Anhui Gujing go up and down completely randomly.

Pair Corralation between Dezhan HealthCare and Anhui Gujing

Assuming the 90 days trading horizon Dezhan HealthCare Co is expected to under-perform the Anhui Gujing. In addition to that, Dezhan HealthCare is 2.5 times more volatile than Anhui Gujing Distillery. It trades about -0.16 of its total potential returns per unit of risk. Anhui Gujing Distillery is currently generating about -0.25 per unit of volatility. If you would invest  19,000  in Anhui Gujing Distillery on October 10, 2024 and sell it today you would lose (2,250) from holding Anhui Gujing Distillery or give up 11.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dezhan HealthCare Co  vs.  Anhui Gujing Distillery

 Performance 
       Timeline  
Dezhan HealthCare 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dezhan HealthCare may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Anhui Gujing Distillery 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Anhui Gujing Distillery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dezhan HealthCare and Anhui Gujing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dezhan HealthCare and Anhui Gujing

The main advantage of trading using opposite Dezhan HealthCare and Anhui Gujing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dezhan HealthCare position performs unexpectedly, Anhui Gujing 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 Anhui Gujing will offset losses from the drop in Anhui Gujing's long position.
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The idea behind Dezhan HealthCare Co and Anhui Gujing Distillery 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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