Correlation Between China Health and Arax Holdings
Can any of the company-specific risk be diversified away by investing in both China Health and Arax Holdings 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 Arax Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Health Management and Arax Holdings Corp, you can compare the effects of market volatilities on China Health and Arax Holdings 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 Arax Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and Arax Holdings.
Diversification Opportunities for China Health and Arax Holdings
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Arax is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and Arax Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arax Holdings Corp 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 Management are associated (or correlated) with Arax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arax Holdings Corp has no effect on the direction of China Health i.e., China Health and Arax Holdings go up and down completely randomly.
Pair Corralation between China Health and Arax Holdings
Given the investment horizon of 90 days China Health is expected to generate 2.32 times less return on investment than Arax Holdings. But when comparing it to its historical volatility, China Health Management is 2.06 times less risky than Arax Holdings. It trades about 0.06 of its potential returns per unit of risk. Arax Holdings Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Arax Holdings Corp on August 26, 2024 and sell it today you would earn a total of 40.00 from holding Arax Holdings Corp or generate 266.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Health Management vs. Arax Holdings Corp
Performance |
| Timeline |
| China Health Management |
| Arax Holdings Corp |
China Health and Arax Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Health and Arax Holdings
The main advantage of trading using opposite China Health and Arax Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Health position performs unexpectedly, Arax Holdings 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 Arax Holdings will offset losses from the drop in Arax Holdings' long position.| China Health vs. Boxlight Corp Class | China Health vs. Siyata Mobile | China Health vs. ClearOne | China Health vs. HUMANA INC |
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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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