Correlation Between China Medicine and Jadeart
Can any of the company-specific risk be diversified away by investing in both China Medicine and Jadeart 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 Jadeart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Medicine and Jadeart Group, you can compare the effects of market volatilities on China Medicine and Jadeart 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 Jadeart. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Medicine and Jadeart.
Diversification Opportunities for China Medicine and Jadeart
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Jadeart is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Medicine and Jadeart Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jadeart Group 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 Jadeart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jadeart Group has no effect on the direction of China Medicine i.e., China Medicine and Jadeart go up and down completely randomly.
Pair Corralation between China Medicine and Jadeart
Given the investment horizon of 90 days China Medicine is expected to generate 2.98 times more return on investment than Jadeart. However, China Medicine is 2.98 times more volatile than Jadeart Group. It trades about 0.09 of its potential returns per unit of risk. Jadeart Group is currently generating about 0.08 per unit of risk. If you would invest 0.01 in China Medicine on November 28, 2024 and sell it today you would earn a total of 0.00 from holding China Medicine or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
China Medicine vs. Jadeart Group
Performance |
| Timeline |
| China Medicine |
| Jadeart Group |
China Medicine and Jadeart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Medicine and Jadeart
The main advantage of trading using opposite China Medicine and Jadeart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Medicine position performs unexpectedly, Jadeart 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 Jadeart will offset losses from the drop in Jadeart's long position.| China Medicine vs. Cardinal Health | China Medicine vs. Henry Schein | China Medicine vs. Owens Minor | China Medicine vs. Patterson Companies |
| Jadeart vs. Lotus Pharmaceuticals | Jadeart vs. China Medicine | Jadeart vs. China Clean Energy | Jadeart vs. China Power Equipment |
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 Stocks Directory module to find actively traded stocks across global markets.
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