Correlation Between China Medicine and China Power
Can any of the company-specific risk be diversified away by investing in both China Medicine and China Power 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 Medicine and China Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Medicine and China Power Equipment, you can compare the effects of market volatilities on China Medicine and China Power 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 Medicine with a short position of China Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Medicine and China Power.
Diversification Opportunities for China Medicine and China Power
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Medicine and China Power Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Power Equipment and China Medicine 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 Medicine are associated (or correlated) with China Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Power Equipment has no effect on the direction of China Medicine i.e., China Medicine and China Power go up and down completely randomly.
Pair Corralation between China Medicine and China Power
If you would invest 0.52 in China Power Equipment on September 1, 2024 and sell it today you would earn a total of 0.00 from holding China Power Equipment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Medicine vs. China Power Equipment
Performance |
| Timeline |
| China Medicine |
| China Power Equipment |
China Medicine and China Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Medicine and China Power
The main advantage of trading using opposite China Medicine and China Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Medicine position performs unexpectedly, China Power 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 Power will offset losses from the drop in China Power's long position.| China Medicine vs. Cardinal Health | China Medicine vs. Henry Schein | China Medicine vs. Owens Minor | China Medicine vs. Patterson Companies |
| China Power vs. LightPath Technologies | China Power vs. Methode Electronics | China Power vs. OSI Systems | China Power vs. Plexus Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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