Correlation Between ONWARD MEDICAL and China Railway
Can any of the company-specific risk be diversified away by investing in both ONWARD MEDICAL and China Railway 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 ONWARD MEDICAL and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONWARD MEDICAL BV and China Railway Group, you can compare the effects of market volatilities on ONWARD MEDICAL and China Railway 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 ONWARD MEDICAL with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONWARD MEDICAL and China Railway.
Diversification Opportunities for ONWARD MEDICAL and China Railway
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ONWARD and China is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ONWARD MEDICAL BV and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group and ONWARD 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 ONWARD MEDICAL BV are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of ONWARD MEDICAL i.e., ONWARD MEDICAL and China Railway go up and down completely randomly.
Pair Corralation between ONWARD MEDICAL and China Railway
Assuming the 90 days horizon ONWARD MEDICAL is expected to generate 3.91 times less return on investment than China Railway. But when comparing it to its historical volatility, ONWARD MEDICAL BV is 1.03 times less risky than China Railway. It trades about 0.01 of its potential returns per unit of risk. China Railway Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17.00 in China Railway Group on September 3, 2024 and sell it today you would earn a total of 27.00 from holding China Railway Group or generate 158.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ONWARD MEDICAL BV vs. China Railway Group
Performance |
| Timeline |
| ONWARD MEDICAL BV |
| China Railway Group |
ONWARD MEDICAL and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONWARD MEDICAL and China Railway
The main advantage of trading using opposite ONWARD MEDICAL and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONWARD MEDICAL position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| ONWARD MEDICAL vs. ADRIATIC METALS LS 013355 | ONWARD MEDICAL vs. TFS FINANCIAL | ONWARD MEDICAL vs. Aozora Bank | ONWARD MEDICAL vs. COMINTL BANK ADR1 |
| China Railway vs. Sabra Health Care | China Railway vs. Southwest Airlines Co | China Railway vs. EPSILON HEALTHCARE LTD | China Railway vs. National Health Investors |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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