Correlation Between Healthcare and Dezhan HealthCare

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

Diversification Opportunities for Healthcare and Dezhan HealthCare

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Healthcare and Dezhan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Co and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare and Healthcare 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 Healthcare Co are associated (or correlated) with Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of Healthcare i.e., Healthcare and Dezhan HealthCare go up and down completely randomly.

Pair Corralation between Healthcare and Dezhan HealthCare

Assuming the 90 days trading horizon Healthcare Co is expected to under-perform the Dezhan HealthCare. But the stock apears to be less risky and, when comparing its historical volatility, Healthcare Co is 1.24 times less risky than Dezhan HealthCare. The stock trades about -0.03 of its potential returns per unit of risk. The Dezhan HealthCare Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  372.00  in Dezhan HealthCare Co on September 3, 2024 and sell it today you would lose (53.00) from holding Dezhan HealthCare Co or give up 14.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Healthcare Co  vs.  Dezhan HealthCare Co

 Performance 
       Timeline  
Healthcare 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.
Dezhan HealthCare 

Risk-Adjusted Performance

12 of 100

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

Healthcare and Dezhan HealthCare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Healthcare and Dezhan HealthCare

The main advantage of trading using opposite Healthcare and Dezhan HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare position performs unexpectedly, Dezhan 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 Dezhan HealthCare will offset losses from the drop in Dezhan HealthCare's long position.
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The idea behind Healthcare Co and Dezhan HealthCare Co 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 Stocks Directory module to find actively traded stocks across global markets.

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