Correlation Between Wanhua Chemical and Healthcare
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By analyzing existing cross correlation between Wanhua Chemical Group and Healthcare Co, you can compare the effects of market volatilities on Wanhua Chemical and Healthcare 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 Wanhua Chemical with a short position of Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Healthcare.
Diversification Opportunities for Wanhua Chemical and Healthcare
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wanhua and Healthcare is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare and Wanhua Chemical 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 Wanhua Chemical Group are associated (or correlated) with Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Healthcare go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Healthcare
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.72 times less risky than Healthcare. The stock trades about -0.27 of its potential returns per unit of risk. The Healthcare Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Healthcare Co on October 29, 2024 and sell it today you would lose (15.00) from holding Healthcare Co or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Healthcare Co
Performance |
| Timeline |
| Wanhua Chemical Group |
| Healthcare |
Wanhua Chemical and Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Healthcare
The main advantage of trading using opposite Wanhua Chemical and Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Healthcare 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 Healthcare will offset losses from the drop in Healthcare's long position.| Wanhua Chemical vs. Anhui Fuhuang Steel | Wanhua Chemical vs. BrightGene Bio Medical | Wanhua Chemical vs. Hangzhou Guotai Environmental | Wanhua Chemical vs. Fujian Nanwang Environment |
| Healthcare vs. Shanghai Jinfeng Wine | Healthcare vs. Holitech Technology Co | Healthcare vs. iSoftStone Information Technology | Healthcare vs. Beijing Kaiwen Education |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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