Correlation Between Dezhan HealthCare and Sanan Optoelectronics

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Can any of the company-specific risk be diversified away by investing in both Dezhan HealthCare and Sanan Optoelectronics 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 Sanan Optoelectronics 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 Sanan Optoelectronics Co, you can compare the effects of market volatilities on Dezhan HealthCare and Sanan Optoelectronics 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 Sanan Optoelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dezhan HealthCare and Sanan Optoelectronics.

Diversification Opportunities for Dezhan HealthCare and Sanan Optoelectronics

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Dezhan HealthCare and Sanan Optoelectronics

Assuming the 90 days trading horizon Dezhan HealthCare Co is expected to under-perform the Sanan Optoelectronics. In addition to that, Dezhan HealthCare is 1.34 times more volatile than Sanan Optoelectronics Co. It trades about -0.1 of its total potential returns per unit of risk. Sanan Optoelectronics Co is currently generating about -0.06 per unit of volatility. If you would invest  1,172  in Sanan Optoelectronics Co on November 3, 2024 and sell it today you would lose (26.00) from holding Sanan Optoelectronics Co or give up 2.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dezhan HealthCare Co  vs.  Sanan Optoelectronics Co

 Performance 
       Timeline  
Dezhan HealthCare 

Risk-Adjusted Performance

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Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 2 (%) 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 March 2025.
Sanan Optoelectronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sanan Optoelectronics Co 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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dezhan HealthCare and Sanan Optoelectronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dezhan HealthCare and Sanan Optoelectronics

The main advantage of trading using opposite Dezhan HealthCare and Sanan Optoelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dezhan HealthCare position performs unexpectedly, Sanan Optoelectronics 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 Sanan Optoelectronics will offset losses from the drop in Sanan Optoelectronics' long position.
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The idea behind Dezhan HealthCare Co and Sanan Optoelectronics Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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