Correlation Between Federal National and China Health
Can any of the company-specific risk be diversified away by investing in both Federal National 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 Federal National and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal National Mortgage and China Health Industries, you can compare the effects of market volatilities on Federal National 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 Federal National with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and China Health.
Diversification Opportunities for Federal National and China Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and China Health Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Industries and Federal National 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 Federal National Mortgage 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 Industries has no effect on the direction of Federal National i.e., Federal National and China Health go up and down completely randomly.
Pair Corralation between Federal National and China Health
Assuming the 90 days horizon Federal National is expected to generate 5.12 times less return on investment than China Health. But when comparing it to its historical volatility, Federal National Mortgage is 6.73 times less risky than China Health. It trades about 0.09 of its potential returns per unit of risk. China Health Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 22.00 in China Health Industries on September 4, 2024 and sell it today you would earn a total of 11.00 from holding China Health Industries or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. China Health Industries
Performance |
| Timeline |
| Federal National Mortgage |
| China Health Industries |
Federal National and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and China Health
The main advantage of trading using opposite Federal National and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National 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.| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
| China Health vs. Federal National Mortgage | China Health vs. Shinhan Financial Group | China Health vs. Woori Financial Group | China Health vs. Grupo Aval |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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