Correlation Between National Health and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both National Health and CHINA HUARONG 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 CHINA HUARONG 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 CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on National Health and CHINA HUARONG 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 CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and CHINA HUARONG.
Diversification Opportunities for National Health and CHINA HUARONG
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and CHINA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD 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 CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of National Health i.e., National Health and CHINA HUARONG go up and down completely randomly.
Pair Corralation between National Health and CHINA HUARONG
Assuming the 90 days trading horizon National Health is expected to generate 15.77 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, National Health Investors is 17.5 times less risky than CHINA HUARONG. It trades about 0.1 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.45 in CHINA HUARONG ENERHD 50 on September 3, 2024 and sell it today you would lose (0.30) from holding CHINA HUARONG ENERHD 50 or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| National Health Investors |
| CHINA HUARONG ENERHD |
National Health and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and CHINA HUARONG
The main advantage of trading using opposite National Health and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, CHINA HUARONG 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 HUARONG will offset losses from the drop in CHINA HUARONG's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| CHINA HUARONG vs. Waste Management | CHINA HUARONG vs. National Health Investors | CHINA HUARONG vs. Apollo Investment Corp | CHINA HUARONG vs. FEMALE HEALTH |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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