Correlation Between SRH Total and China Health
Can any of the company-specific risk be diversified away by investing in both SRH Total 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 SRH Total and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SRH Total Return and China Health Management, you can compare the effects of market volatilities on SRH Total 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 SRH Total with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of SRH Total and China Health.
Diversification Opportunities for SRH Total and China Health
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SRH and China is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SRH Total Return 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 SRH Total 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 SRH Total Return 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 SRH Total i.e., SRH Total and China Health go up and down completely randomly.
Pair Corralation between SRH Total and China Health
Given the investment horizon of 90 days SRH Total is expected to generate 10.61 times less return on investment than China Health. But when comparing it to its historical volatility, SRH Total Return is 18.54 times less risky than China Health. It trades about 0.09 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 1.70 in China Health Management on September 3, 2024 and sell it today you would lose (1.30) from holding China Health Management or give up 76.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SRH Total Return vs. China Health Management
Performance |
| Timeline |
| SRH Total Return |
| China Health Management |
SRH Total and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SRH Total and China Health
The main advantage of trading using opposite SRH Total and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SRH Total 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.| SRH Total vs. Eaton Vance National | SRH Total vs. Invesco High Income | SRH Total vs. Blackrock Muniholdings Ny | SRH Total vs. Nuveen California Select |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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