Correlation Between Easywell Biomedicals and Great China
Can any of the company-specific risk be diversified away by investing in both Easywell Biomedicals and Great China 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 Easywell Biomedicals and Great China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easywell Biomedicals and Great China Metal, you can compare the effects of market volatilities on Easywell Biomedicals and Great 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 Easywell Biomedicals with a short position of Great China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easywell Biomedicals and Great China.
Diversification Opportunities for Easywell Biomedicals and Great China
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Easywell and Great is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Easywell Biomedicals and Great China Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great China Metal and Easywell Biomedicals 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 Easywell Biomedicals are associated (or correlated) with Great China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great China Metal has no effect on the direction of Easywell Biomedicals i.e., Easywell Biomedicals and Great China go up and down completely randomly.
Pair Corralation between Easywell Biomedicals and Great China
Assuming the 90 days trading horizon Easywell Biomedicals is expected to generate 9.53 times more return on investment than Great China. However, Easywell Biomedicals is 9.53 times more volatile than Great China Metal. It trades about 0.07 of its potential returns per unit of risk. Great China Metal is currently generating about -0.04 per unit of risk. If you would invest 4,006 in Easywell Biomedicals on September 2, 2024 and sell it today you would earn a total of 2,784 from holding Easywell Biomedicals or generate 69.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easywell Biomedicals vs. Great China Metal
Performance |
| Timeline |
| Easywell Biomedicals |
| Great China Metal |
Easywell Biomedicals and Great China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easywell Biomedicals and Great China
The main advantage of trading using opposite Easywell Biomedicals and Great China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easywell Biomedicals position performs unexpectedly, Great 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 Great China will offset losses from the drop in Great China's long position.| Easywell Biomedicals vs. Universal Vision Biotechnology | Easywell Biomedicals vs. Excelsior Medical Co | Easywell Biomedicals vs. Hi Clearance | Easywell Biomedicals vs. Brighten Optix |
| Great China vs. Basso Industry Corp | Great China vs. Chung Hsin Electric Machinery | Great China vs. TYC Brother Industrial | Great China vs. TECO Electric Machinery |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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