Correlation Between China Health and Digitiliti
Can any of the company-specific risk be diversified away by investing in both China Health and Digitiliti 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 China Health and Digitiliti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Health Industries and Digitiliti, you can compare the effects of market volatilities on China Health and Digitiliti 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 China Health with a short position of Digitiliti. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and Digitiliti.
Diversification Opportunities for China Health and Digitiliti
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Digitiliti is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding China Health Industries and Digitiliti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digitiliti and China Health 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 China Health Industries are associated (or correlated) with Digitiliti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digitiliti has no effect on the direction of China Health i.e., China Health and Digitiliti go up and down completely randomly.
Pair Corralation between China Health and Digitiliti
Given the investment horizon of 90 days China Health Industries is expected to generate 8.88 times more return on investment than Digitiliti. However, China Health is 8.88 times more volatile than Digitiliti. It trades about 0.07 of its potential returns per unit of risk. Digitiliti is currently generating about -0.05 per unit of risk. If you would invest 22.00 in China Health Industries on September 2, 2024 and sell it today you would earn a total of 11.00 from holding China Health Industries or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
China Health Industries vs. Digitiliti
Performance |
| Timeline |
| China Health Industries |
| Digitiliti |
China Health and Digitiliti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Health and Digitiliti
The main advantage of trading using opposite China Health and Digitiliti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Health position performs unexpectedly, Digitiliti 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 Digitiliti will offset losses from the drop in Digitiliti's long position.| China Health vs. Signet International Holdings | China Health vs. National Beverage Corp | China Health vs. PT Astra International | China Health vs. Vita Coco |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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