Correlation Between Embrace Change and China Health
Can any of the company-specific risk be diversified away by investing in both Embrace Change and China Health 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 Embrace Change and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and China Health Management, you can compare the effects of market volatilities on Embrace Change and China Health 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 Embrace Change with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and China Health.
Diversification Opportunities for Embrace Change and China Health
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embrace and China is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and China Health Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Management and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Management has no effect on the direction of Embrace Change i.e., Embrace Change and China Health go up and down completely randomly.
Pair Corralation between Embrace Change and China Health
Given the investment horizon of 90 days Embrace Change is expected to generate 28.14 times less return on investment than China Health. But when comparing it to its historical volatility, Embrace Change Acquisition is 72.31 times less risky than China Health. It trades about 0.13 of its potential returns per unit of risk. China Health Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.10 in China Health Management on October 21, 2024 and sell it today you would lose (0.76) from holding China Health Management or give up 69.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Embrace Change Acquisition vs. China Health Management
Performance |
| Timeline |
| Embrace Change Acqui |
| China Health Management |
Embrace Change and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and China Health
The main advantage of trading using opposite Embrace Change and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, China Health 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 Health will offset losses from the drop in China Health's long position.| Embrace Change vs. China Health Management | Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT |
| China Health vs. Absolute Health and | China Health vs. Embrace Change Acquisition | China Health vs. Supurva Healthcare Group | China Health vs. TransAKT |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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