Correlation Between Molina Healthcare and Wenzhou Kangning
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and Wenzhou Kangning 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 Molina Healthcare and Wenzhou Kangning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on Molina Healthcare and Wenzhou Kangning 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 Molina Healthcare with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and Wenzhou Kangning.
Diversification Opportunities for Molina Healthcare and Wenzhou Kangning
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Molina and Wenzhou is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and Molina Healthcare 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 Molina Healthcare are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Wenzhou Kangning go up and down completely randomly.
Pair Corralation between Molina Healthcare and Wenzhou Kangning
Assuming the 90 days trading horizon Molina Healthcare is expected to generate 0.45 times more return on investment than Wenzhou Kangning. However, Molina Healthcare is 2.21 times less risky than Wenzhou Kangning. It trades about 0.18 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.25 per unit of risk. If you would invest 27,780 in Molina Healthcare on October 15, 2024 and sell it today you would earn a total of 890.00 from holding Molina Healthcare or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. Wenzhou Kangning Hospital
Performance |
| Timeline |
| Molina Healthcare |
| Wenzhou Kangning Hospital |
Molina Healthcare and Wenzhou Kangning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and Wenzhou Kangning
The main advantage of trading using opposite Molina Healthcare and Wenzhou Kangning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, Wenzhou Kangning 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 Wenzhou Kangning will offset losses from the drop in Wenzhou Kangning's long position.| Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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