Correlation Between Beijing HuaYuanYiTong and Zhongzhu Medical
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By analyzing existing cross correlation between Beijing HuaYuanYiTong Thermal and Zhongzhu Medical Holdings, you can compare the effects of market volatilities on Beijing HuaYuanYiTong and Zhongzhu 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 Beijing HuaYuanYiTong with a short position of Zhongzhu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing HuaYuanYiTong and Zhongzhu Medical.
Diversification Opportunities for Beijing HuaYuanYiTong and Zhongzhu Medical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beijing and Zhongzhu is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Beijing HuaYuanYiTong Thermal and Zhongzhu Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongzhu Medical Holdings and Beijing HuaYuanYiTong 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 Beijing HuaYuanYiTong Thermal are associated (or correlated) with Zhongzhu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongzhu Medical Holdings has no effect on the direction of Beijing HuaYuanYiTong i.e., Beijing HuaYuanYiTong and Zhongzhu Medical go up and down completely randomly.
Pair Corralation between Beijing HuaYuanYiTong and Zhongzhu Medical
Assuming the 90 days trading horizon Beijing HuaYuanYiTong Thermal is expected to under-perform the Zhongzhu Medical. But the stock apears to be less risky and, when comparing its historical volatility, Beijing HuaYuanYiTong Thermal is 1.19 times less risky than Zhongzhu Medical. The stock trades about -0.27 of its potential returns per unit of risk. The Zhongzhu Medical Holdings is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 136.00 in Zhongzhu Medical Holdings on October 28, 2024 and sell it today you would lose (10.00) from holding Zhongzhu Medical Holdings or give up 7.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing HuaYuanYiTong Thermal vs. Zhongzhu Medical Holdings
Performance |
| Timeline |
| Beijing HuaYuanYiTong |
| Zhongzhu Medical Holdings |
Beijing HuaYuanYiTong and Zhongzhu Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing HuaYuanYiTong and Zhongzhu Medical
The main advantage of trading using opposite Beijing HuaYuanYiTong and Zhongzhu Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing HuaYuanYiTong position performs unexpectedly, Zhongzhu 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 Zhongzhu Medical will offset losses from the drop in Zhongzhu Medical's long position.The idea behind Beijing HuaYuanYiTong Thermal and Zhongzhu Medical Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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