Correlation Between Cowealth Medical and Xian International
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By analyzing existing cross correlation between Cowealth Medical China and Xian International Medical, you can compare the effects of market volatilities on Cowealth Medical and Xian International 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 Cowealth Medical with a short position of Xian International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cowealth Medical and Xian International.
Diversification Opportunities for Cowealth Medical and Xian International
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cowealth and Xian is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cowealth Medical China and Xian International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xian International and Cowealth Medical 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 Cowealth Medical China are associated (or correlated) with Xian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xian International has no effect on the direction of Cowealth Medical i.e., Cowealth Medical and Xian International go up and down completely randomly.
Pair Corralation between Cowealth Medical and Xian International
Assuming the 90 days trading horizon Cowealth Medical China is expected to under-perform the Xian International. But the stock apears to be less risky and, when comparing its historical volatility, Cowealth Medical China is 1.09 times less risky than Xian International. The stock trades about -0.05 of its potential returns per unit of risk. The Xian International Medical is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 543.00 in Xian International Medical on September 1, 2024 and sell it today you would earn a total of 77.00 from holding Xian International Medical or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cowealth Medical China vs. Xian International Medical
Performance |
| Timeline |
| Cowealth Medical China |
| Xian International |
Cowealth Medical and Xian International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cowealth Medical and Xian International
The main advantage of trading using opposite Cowealth Medical and Xian International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cowealth Medical position performs unexpectedly, Xian International 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 Xian International will offset losses from the drop in Xian International's long position.The idea behind Cowealth Medical China and Xian International Medical 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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