Correlation Between China Health and Nouveau Life
Can any of the company-specific risk be diversified away by investing in both China Health and Nouveau Life 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 Nouveau Life 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 Nouveau Life Pharmaceuticals, you can compare the effects of market volatilities on China Health and Nouveau Life 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 Nouveau Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and Nouveau Life.
Diversification Opportunities for China Health and Nouveau Life
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Nouveau is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and Nouveau Life Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Life Pharmac 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 Nouveau Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Life Pharmac has no effect on the direction of China Health i.e., China Health and Nouveau Life go up and down completely randomly.
Pair Corralation between China Health and Nouveau Life
Given the investment horizon of 90 days China Health is expected to generate 25.41 times less return on investment than Nouveau Life. But when comparing it to its historical volatility, China Health Management is 9.15 times less risky than Nouveau Life. It trades about 0.04 of its potential returns per unit of risk. Nouveau Life Pharmaceuticals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Nouveau Life Pharmaceuticals on August 27, 2024 and sell it today you would lose (0.01) from holding Nouveau Life Pharmaceuticals or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Health Management vs. Nouveau Life Pharmaceuticals
Performance |
| Timeline |
| China Health Management |
| Nouveau Life Pharmac |
China Health and Nouveau Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Health and Nouveau Life
The main advantage of trading using opposite China Health and Nouveau Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Health position performs unexpectedly, Nouveau Life 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 Nouveau Life will offset losses from the drop in Nouveau Life's 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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