Correlation Between HeNan Splendor and Innovative Medical

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

Diversification Opportunities for HeNan Splendor and Innovative Medical

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between HeNan and Innovative is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding HeNan Splendor Science and Innovative Medical Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Medical and HeNan Splendor 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 HeNan Splendor Science are associated (or correlated) with Innovative Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Medical has no effect on the direction of HeNan Splendor i.e., HeNan Splendor and Innovative Medical go up and down completely randomly.

Pair Corralation between HeNan Splendor and Innovative Medical

Assuming the 90 days trading horizon HeNan Splendor is expected to generate 2.17 times less return on investment than Innovative Medical. But when comparing it to its historical volatility, HeNan Splendor Science is 1.2 times less risky than Innovative Medical. It trades about 0.02 of its potential returns per unit of risk. Innovative Medical Management is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  713.00  in Innovative Medical Management on October 16, 2024 and sell it today you would earn a total of  125.00  from holding Innovative Medical Management or generate 17.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

HeNan Splendor Science  vs.  Innovative Medical Management

 Performance 
       Timeline  
HeNan Splendor Science 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HeNan Splendor Science are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HeNan Splendor may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Innovative Medical 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Medical Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innovative Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

HeNan Splendor and Innovative Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HeNan Splendor and Innovative Medical

The main advantage of trading using opposite HeNan Splendor and Innovative Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeNan Splendor position performs unexpectedly, Innovative Medical 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 Innovative Medical will offset losses from the drop in Innovative Medical's long position.
The idea behind HeNan Splendor Science and Innovative Medical Management 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 CEOs Directory module to screen CEOs from public companies around the world.

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