Correlation Between Sanbo Hospital and Luolai Home

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

Diversification Opportunities for Sanbo Hospital and Luolai Home

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Sanbo and Luolai is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and Luolai Home Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luolai Home Textile and Sanbo Hospital 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 Sanbo Hospital Management are associated (or correlated) with Luolai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luolai Home Textile has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and Luolai Home go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Luolai Home

Assuming the 90 days trading horizon Sanbo Hospital Management is expected to generate 2.48 times more return on investment than Luolai Home. However, Sanbo Hospital is 2.48 times more volatile than Luolai Home Textile. It trades about 0.04 of its potential returns per unit of risk. Luolai Home Textile is currently generating about -0.03 per unit of risk. If you would invest  2,960  in Sanbo Hospital Management on October 27, 2024 and sell it today you would earn a total of  1,550  from holding Sanbo Hospital Management or generate 52.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy87.97%
ValuesDaily Returns

Sanbo Hospital Management  vs.  Luolai Home Textile

 Performance 
       Timeline  
Sanbo Hospital Management 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sanbo Hospital Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sanbo Hospital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Luolai Home Textile 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Luolai Home Textile are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Luolai Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sanbo Hospital and Luolai Home Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sanbo Hospital and Luolai Home

The main advantage of trading using opposite Sanbo Hospital and Luolai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanbo Hospital position performs unexpectedly, Luolai Home 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 Luolai Home will offset losses from the drop in Luolai Home's long position.
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The idea behind Sanbo Hospital Management and Luolai Home Textile 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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