Correlation Between Enhabit and China Evergrande
Can any of the company-specific risk be diversified away by investing in both Enhabit and China Evergrande 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 Enhabit and China Evergrande into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhabit and China Evergrande New, you can compare the effects of market volatilities on Enhabit and China Evergrande 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 Enhabit with a short position of China Evergrande. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhabit and China Evergrande.
Diversification Opportunities for Enhabit and China Evergrande
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enhabit and China is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and China Evergrande New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Evergrande New and Enhabit 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 Enhabit are associated (or correlated) with China Evergrande. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Evergrande New has no effect on the direction of Enhabit i.e., Enhabit and China Evergrande go up and down completely randomly.
Pair Corralation between Enhabit and China Evergrande
Given the investment horizon of 90 days Enhabit is expected to generate 0.24 times more return on investment than China Evergrande. However, Enhabit is 4.12 times less risky than China Evergrande. It trades about 0.15 of its potential returns per unit of risk. China Evergrande New is currently generating about -0.21 per unit of risk. If you would invest 725.00 in Enhabit on September 2, 2024 and sell it today you would earn a total of 48.00 from holding Enhabit or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Enhabit vs. China Evergrande New
Performance |
| Timeline |
| Enhabit |
| China Evergrande New |
Enhabit and China Evergrande Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhabit and China Evergrande
The main advantage of trading using opposite Enhabit and China Evergrande positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhabit position performs unexpectedly, China Evergrande 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 China Evergrande will offset losses from the drop in China Evergrande's long position.| Enhabit vs. The Ensign Group | Enhabit vs. Pennant Group | Enhabit vs. InnovAge Holding Corp | Enhabit vs. National HealthCare |
| China Evergrande vs. Pennant Group | China Evergrande vs. Encompass Health Corp | China Evergrande vs. Enhabit | China Evergrande vs. Concord Medical Services |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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