Correlation Between China Evergrande and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both China Evergrande and Medical Facilities 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 Evergrande and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Evergrande New and Medical Facilities, you can compare the effects of market volatilities on China Evergrande and Medical Facilities 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 Evergrande with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Evergrande and Medical Facilities.
Diversification Opportunities for China Evergrande and Medical Facilities
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Medical is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Evergrande New and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and China Evergrande 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 Evergrande New are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of China Evergrande i.e., China Evergrande and Medical Facilities go up and down completely randomly.
Pair Corralation between China Evergrande and Medical Facilities
Assuming the 90 days horizon China Evergrande New is expected to generate 41.31 times more return on investment than Medical Facilities. However, China Evergrande is 41.31 times more volatile than Medical Facilities. It trades about 0.09 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.18 per unit of risk. If you would invest 2.00 in China Evergrande New on September 1, 2024 and sell it today you would earn a total of 0.00 from holding China Evergrande New or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.18% |
| Values | Daily Returns |
China Evergrande New vs. Medical Facilities
Performance |
| Timeline |
| China Evergrande New |
| Medical Facilities |
China Evergrande and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Evergrande and Medical Facilities
The main advantage of trading using opposite China Evergrande and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Evergrande position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| China Evergrande vs. Fresenius Medical Care | China Evergrande vs. Universal Health Services | China Evergrande vs. Addus HomeCare | China Evergrande vs. HCA Holdings |
| Medical Facilities vs. Jack Nathan Medical | Medical Facilities vs. Fresenius SE Co | Medical Facilities vs. Ramsay Health Care | Medical Facilities vs. Pennant Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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