Correlation Between National Health and Datang International
Can any of the company-specific risk be diversified away by investing in both National Health and Datang International 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 National Health and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and Datang International Power, you can compare the effects of market volatilities on National Health and Datang International 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 National Health with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Datang International.
Diversification Opportunities for National Health and Datang International
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Datang is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and National Health 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 National Health Investors are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of National Health i.e., National Health and Datang International go up and down completely randomly.
Pair Corralation between National Health and Datang International
Assuming the 90 days trading horizon National Health Investors is expected to generate 0.45 times more return on investment than Datang International. However, National Health Investors is 2.24 times less risky than Datang International. It trades about 0.1 of its potential returns per unit of risk. Datang International Power is currently generating about 0.04 per unit of risk. If you would invest 4,612 in National Health Investors on September 14, 2024 and sell it today you would earn a total of 2,338 from holding National Health Investors or generate 50.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Datang International Power
Performance |
| Timeline |
| National Health Investors |
| Datang International |
National Health and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Datang International
The main advantage of trading using opposite National Health and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| Datang International vs. Autohome ADR | Datang International vs. Neinor Homes SA | Datang International vs. Haier Smart Home | Datang International vs. bet at home AG |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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