Correlation Between China Health and IHI Corp
Can any of the company-specific risk be diversified away by investing in both China Health and IHI Corp 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 IHI Corp 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 IHI Corp ADR, you can compare the effects of market volatilities on China Health and IHI Corp 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 IHI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and IHI Corp.
Diversification Opportunities for China Health and IHI Corp
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and IHI is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding China Health Industries and IHI Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHI Corp ADR 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 IHI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHI Corp ADR has no effect on the direction of China Health i.e., China Health and IHI Corp go up and down completely randomly.
Pair Corralation between China Health and IHI Corp
Given the investment horizon of 90 days China Health is expected to generate 25.97 times less return on investment than IHI Corp. In addition to that, China Health is 2.67 times more volatile than IHI Corp ADR. It trades about 0.0 of its total potential returns per unit of risk. IHI Corp ADR is currently generating about 0.12 per unit of volatility. If you would invest 639.00 in IHI Corp ADR on September 1, 2024 and sell it today you would earn a total of 634.00 from holding IHI Corp ADR or generate 99.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
China Health Industries vs. IHI Corp ADR
Performance |
| Timeline |
| China Health Industries |
| IHI Corp ADR |
China Health and IHI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Health and IHI Corp
The main advantage of trading using opposite China Health and IHI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Health position performs unexpectedly, IHI Corp 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 IHI Corp will offset losses from the drop in IHI Corp's long position.| China Health vs. Stagwell | China Health vs. The Mosaic | China Health vs. Balchem | China Health vs. Avient Corp |
| IHI Corp vs. Sandvik AB ADR | IHI Corp vs. Schneider Electric SA | IHI Corp vs. Fanuc | IHI Corp vs. Rockwell Automation |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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