Correlation Between EHEALTH and CRRC
Can any of the company-specific risk be diversified away by investing in both EHEALTH and CRRC 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 EHEALTH and CRRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EHEALTH and CRRC Limited, you can compare the effects of market volatilities on EHEALTH and CRRC 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 EHEALTH with a short position of CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and CRRC.
Diversification Opportunities for EHEALTH and CRRC
Poor diversification
The 3 months correlation between EHEALTH and CRRC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited and EHEALTH 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 EHEALTH are associated (or correlated) with CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of EHEALTH i.e., EHEALTH and CRRC go up and down completely randomly.
Pair Corralation between EHEALTH and CRRC
Assuming the 90 days trading horizon EHEALTH is expected to under-perform the CRRC. In addition to that, EHEALTH is 1.03 times more volatile than CRRC Limited. It trades about -0.01 of its total potential returns per unit of risk. CRRC Limited is currently generating about 0.11 per unit of volatility. If you would invest 24.00 in CRRC Limited on September 14, 2024 and sell it today you would earn a total of 37.00 from holding CRRC Limited or generate 154.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
EHEALTH vs. CRRC Limited
Performance |
| Timeline |
| EHEALTH |
| CRRC Limited |
EHEALTH and CRRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHEALTH and CRRC
The main advantage of trading using opposite EHEALTH and CRRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH position performs unexpectedly, CRRC 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 CRRC will offset losses from the drop in CRRC's long position.The idea behind EHEALTH and CRRC Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CRRC vs. Datang International Power | CRRC vs. Pure Storage | CRRC vs. National Storage Affiliates | CRRC vs. Hochschild Mining plc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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