Correlation Between China Health and SRH Total
Can any of the company-specific risk be diversified away by investing in both China Health and SRH Total 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 SRH Total 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 SRH Total Return, you can compare the effects of market volatilities on China Health and SRH Total 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 SRH Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and SRH Total.
Diversification Opportunities for China Health and SRH Total
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and SRH is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and SRH Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRH Total Return 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 SRH Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRH Total Return has no effect on the direction of China Health i.e., China Health and SRH Total go up and down completely randomly.
Pair Corralation between China Health and SRH Total
Given the investment horizon of 90 days China Health Management is expected to generate 18.54 times more return on investment than SRH Total. However, China Health is 18.54 times more volatile than SRH Total Return. It trades about 0.05 of its potential returns per unit of risk. SRH Total Return is currently generating about 0.09 per unit of risk. If you would invest 1.70 in China Health Management on September 3, 2024 and sell it today you would lose (1.30) from holding China Health Management or give up 76.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Health Management vs. SRH Total Return
Performance |
| Timeline |
| China Health Management |
| SRH Total Return |
China Health and SRH Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Health and SRH Total
The main advantage of trading using opposite China Health and SRH Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Health position performs unexpectedly, SRH Total 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 SRH Total will offset losses from the drop in SRH Total's long position.| China Health vs. Absolute Health and | China Health vs. Embrace Change Acquisition | China Health vs. Supurva Healthcare Group | China Health vs. TransAKT |
| SRH Total vs. Eaton Vance National | SRH Total vs. Invesco High Income | SRH Total vs. Blackrock Muniholdings Ny | SRH Total vs. Nuveen California Select |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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