Correlation Between Innovative Medical and Digital China
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By analyzing existing cross correlation between Innovative Medical Management and Digital China Information, you can compare the effects of market volatilities on Innovative Medical and Digital China 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 Innovative Medical with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Medical and Digital China.
Diversification Opportunities for Innovative Medical and Digital China
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovative and Digital is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Medical Management and Digital China Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Information and Innovative Medical 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 Innovative Medical Management are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Information has no effect on the direction of Innovative Medical i.e., Innovative Medical and Digital China go up and down completely randomly.
Pair Corralation between Innovative Medical and Digital China
Assuming the 90 days trading horizon Innovative Medical Management is expected to under-perform the Digital China. In addition to that, Innovative Medical is 1.25 times more volatile than Digital China Information. It trades about -0.08 of its total potential returns per unit of risk. Digital China Information is currently generating about 0.07 per unit of volatility. If you would invest 1,314 in Digital China Information on September 12, 2024 and sell it today you would earn a total of 50.00 from holding Digital China Information or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Medical Management vs. Digital China Information
Performance |
| Timeline |
| Innovative Medical |
| Digital China Information |
Innovative Medical and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Medical and Digital China
The main advantage of trading using opposite Innovative Medical and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Medical position performs unexpectedly, Digital China 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 Digital China will offset losses from the drop in Digital China's long position.The idea behind Innovative Medical Management and Digital China Information 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 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.
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