Correlation Between China Health and Mundus
Can any of the company-specific risk be diversified away by investing in both China Health and Mundus 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 Mundus 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 Mundus Group, you can compare the effects of market volatilities on China Health and Mundus 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 Mundus. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and Mundus.
Diversification Opportunities for China Health and Mundus
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Mundus is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and Mundus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundus Group 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 Mundus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundus Group has no effect on the direction of China Health i.e., China Health and Mundus go up and down completely randomly.
Pair Corralation between China Health and Mundus
Given the investment horizon of 90 days China Health Management is expected to generate 1.16 times more return on investment than Mundus. However, China Health is 1.16 times more volatile than Mundus Group. It trades about 0.05 of its potential returns per unit of risk. Mundus Group is currently generating about 0.05 per unit of risk. If you would invest 1.21 in China Health Management on September 2, 2024 and sell it today you would lose (0.81) from holding China Health Management or give up 66.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
China Health Management vs. Mundus Group
Performance |
| Timeline |
| China Health Management |
| Mundus Group |
China Health and Mundus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Health and Mundus
The main advantage of trading using opposite China Health and Mundus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Health position performs unexpectedly, Mundus 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 Mundus will offset losses from the drop in Mundus' long position.| China Health vs. Absolute Health and | China Health vs. Embrace Change Acquisition | China Health vs. Supurva Healthcare Group | China Health vs. TransAKT |
| Mundus vs. Atlas Technology Grp | Mundus vs. TransAKT | Mundus vs. China Health Management | Mundus vs. American Leisure Holdings |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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