Correlation Between Guangzhou Boji and Sanbo Hospital

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

Diversification Opportunities for Guangzhou Boji and Sanbo Hospital

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Guangzhou and Sanbo is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Boji Medical and Sanbo Hospital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanbo Hospital Management and Guangzhou Boji 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 Guangzhou Boji Medical are associated (or correlated) with Sanbo Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanbo Hospital Management has no effect on the direction of Guangzhou Boji i.e., Guangzhou Boji and Sanbo Hospital go up and down completely randomly.

Pair Corralation between Guangzhou Boji and Sanbo Hospital

Assuming the 90 days trading horizon Guangzhou Boji Medical is expected to generate 0.93 times more return on investment than Sanbo Hospital. However, Guangzhou Boji Medical is 1.08 times less risky than Sanbo Hospital. It trades about 0.06 of its potential returns per unit of risk. Sanbo Hospital Management is currently generating about -0.18 per unit of risk. If you would invest  968.00  in Guangzhou Boji Medical on September 12, 2024 and sell it today you would earn a total of  34.00  from holding Guangzhou Boji Medical or generate 3.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Guangzhou Boji Medical  vs.  Sanbo Hospital Management

 Performance 
       Timeline  
Guangzhou Boji Medical 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Boji Medical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Boji sustained solid returns over the last few months and may actually be approaching a breakup point.
Sanbo Hospital Management 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Sanbo Hospital Management are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanbo Hospital sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Boji and Sanbo Hospital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangzhou Boji and Sanbo Hospital

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

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