Correlation Between Sanbo Hospital and Guangdong Jingyi

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Can any of the company-specific risk be diversified away by investing in both Sanbo Hospital and Guangdong Jingyi 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 Guangdong Jingyi 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 Guangdong Jingyi Metal, you can compare the effects of market volatilities on Sanbo Hospital and Guangdong Jingyi 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 Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanbo Hospital and Guangdong Jingyi.

Diversification Opportunities for Sanbo Hospital and Guangdong Jingyi

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sanbo and Guangdong is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sanbo Hospital Management and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal 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 Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of Sanbo Hospital i.e., Sanbo Hospital and Guangdong Jingyi go up and down completely randomly.

Pair Corralation between Sanbo Hospital and Guangdong Jingyi

Assuming the 90 days trading horizon Sanbo Hospital is expected to generate 6.36 times less return on investment than Guangdong Jingyi. But when comparing it to its historical volatility, Sanbo Hospital Management is 1.19 times less risky than Guangdong Jingyi. It trades about 0.05 of its potential returns per unit of risk. Guangdong Jingyi Metal is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  643.00  in Guangdong Jingyi Metal on November 1, 2024 and sell it today you would earn a total of  86.00  from holding Guangdong Jingyi Metal or generate 13.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Sanbo Hospital Management  vs.  Guangdong Jingyi Metal

 Performance 
       Timeline  
Sanbo Hospital Management 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sanbo Hospital Management has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
Guangdong Jingyi Metal 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Sanbo Hospital and Guangdong Jingyi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sanbo Hospital and Guangdong Jingyi

The main advantage of trading using opposite Sanbo Hospital and Guangdong Jingyi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanbo Hospital position performs unexpectedly, Guangdong Jingyi 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 Guangdong Jingyi will offset losses from the drop in Guangdong Jingyi's long position.
The idea behind Sanbo Hospital Management and Guangdong Jingyi Metal 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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