Correlation Between Dezhan HealthCare and Zoy Home

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

Diversification Opportunities for Dezhan HealthCare and Zoy Home

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Dezhan and Zoy is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dezhan HealthCare Co and Zoy Home Furnishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoy Home Furnishing 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 Zoy Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoy Home Furnishing has no effect on the direction of Dezhan HealthCare i.e., Dezhan HealthCare and Zoy Home go up and down completely randomly.

Pair Corralation between Dezhan HealthCare and Zoy Home

Assuming the 90 days trading horizon Dezhan HealthCare Co is expected to generate 2.49 times more return on investment than Zoy Home. However, Dezhan HealthCare is 2.49 times more volatile than Zoy Home Furnishing. It trades about 0.38 of its potential returns per unit of risk. Zoy Home Furnishing is currently generating about 0.31 per unit of risk. If you would invest  297.00  in Dezhan HealthCare Co on September 15, 2024 and sell it today you would earn a total of  165.00  from holding Dezhan HealthCare Co or generate 55.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Dezhan HealthCare Co  vs.  Zoy Home Furnishing

 Performance 
       Timeline  
Dezhan HealthCare 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dezhan HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.
Zoy Home Furnishing 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Zoy Home Furnishing are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zoy Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Dezhan HealthCare and Zoy Home Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dezhan HealthCare and Zoy Home

The main advantage of trading using opposite Dezhan HealthCare and Zoy Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dezhan HealthCare position performs unexpectedly, Zoy Home 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 Zoy Home will offset losses from the drop in Zoy Home's long position.
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The idea behind Dezhan HealthCare Co and Zoy Home Furnishing 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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