Correlation Between Andon Health and Huizhou Speed

Can any of the company-specific risk be diversified away by investing in both Andon Health and Huizhou Speed 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 Andon Health and Huizhou Speed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andon Health Co and Huizhou Speed Wireless, you can compare the effects of market volatilities on Andon Health and Huizhou Speed 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 Andon Health with a short position of Huizhou Speed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andon Health and Huizhou Speed.

Diversification Opportunities for Andon Health and Huizhou Speed

0.66

Correlation Coefficient

Andon Health  Huizhou Speed

Poor diversification

The 3 months correlation between Andon and Huizhou is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Andon Health Co and Huizhou Speed Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huizhou Speed Wireless and Andon 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 Andon Health Co are associated (or correlated) with Huizhou Speed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huizhou Speed Wireless has no effect on the direction of Andon Health i.e., Andon Health and Huizhou Speed go up and down completely randomly.

Pair Corralation between Andon Health and Huizhou Speed

Assuming the 90 days trading horizon Andon Health Co is expected to under-perform the Huizhou Speed. But the stock apears to be less risky and, when comparing its historical volatility, Andon Health Co is 2.6 times less risky than Huizhou Speed. The stock trades about -0.07 of its potential returns per unit of risk. The Huizhou Speed Wireless is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,249  in Huizhou Speed Wireless on September 28, 2024 and sell it today you would earn a total of  147.00  from holding Huizhou Speed Wireless or generate 11.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Andon Health Co  vs.  Huizhou Speed Wireless

Andon Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andon Health Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Huizhou Speed Wireless

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Huizhou Speed Wireless are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Huizhou Speed sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Andon Health and Huizhou Speed

The main advantage of trading using opposite Andon Health and Huizhou Speed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andon Health position performs unexpectedly, Huizhou Speed 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 Huizhou Speed will offset losses from the drop in Huizhou Speed's long position.

The idea behind Andon Health Co and Huizhou Speed Wireless 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.