Correlation Between Aqua Power and China Health
Can any of the company-specific risk be diversified away by investing in both Aqua Power and China Health 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 Aqua Power and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua Power Systems and China Health Management, you can compare the effects of market volatilities on Aqua Power and China Health 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 Aqua Power with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Power and China Health.
Diversification Opportunities for Aqua Power and China Health
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aqua and China is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Power Systems and China Health Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Management and Aqua Power 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 Aqua Power Systems are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Management has no effect on the direction of Aqua Power i.e., Aqua Power and China Health go up and down completely randomly.
Pair Corralation between Aqua Power and China Health
Given the investment horizon of 90 days Aqua Power Systems is expected to generate 2.85 times more return on investment than China Health. However, Aqua Power is 2.85 times more volatile than China Health Management. It trades about 0.08 of its potential returns per unit of risk. China Health Management is currently generating about -0.27 per unit of risk. If you would invest 2.35 in Aqua Power Systems on October 22, 2024 and sell it today you would earn a total of 0.14 from holding Aqua Power Systems or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Aqua Power Systems vs. China Health Management
Performance |
| Timeline |
| Aqua Power Systems |
| China Health Management |
Aqua Power and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua Power and China Health
The main advantage of trading using opposite Aqua Power and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua Power position performs unexpectedly, China Health 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 Health will offset losses from the drop in China Health's long position.| Aqua Power vs. Nextmart | Aqua Power vs. Good Vibrations Shoes | Aqua Power vs. Genesis Electronics Group | Aqua Power vs. Harrison Vickers and |
| China Health vs. Absolute Health and | China Health vs. Embrace Change Acquisition | China Health vs. Supurva Healthcare Group | China Health vs. TransAKT |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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