Correlation Between Guangdong Shenglu and Everjoy Health

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

By analyzing existing cross correlation between Guangdong Shenglu Telecommunication and Everjoy Health Group, you can compare the effects of market volatilities on Guangdong Shenglu and Everjoy 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 Guangdong Shenglu with a short position of Everjoy Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Shenglu and Everjoy Health.

Diversification Opportunities for Guangdong Shenglu and Everjoy Health

0.77

Correlation Coefficient

Guangdong Shenglu  Everjoy Health

Poor diversification

The 3 months correlation between Guangdong and Everjoy is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Shenglu Telecommunic and Everjoy Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everjoy Health Group and Guangdong Shenglu 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 Guangdong Shenglu Telecommunication are associated (or correlated) with Everjoy Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everjoy Health Group has no effect on the direction of Guangdong Shenglu i.e., Guangdong Shenglu and Everjoy Health go up and down completely randomly.

Pair Corralation between Guangdong Shenglu and Everjoy Health

Assuming the 90 days trading horizon Guangdong Shenglu Telecommunication is expected to generate 0.84 times more return on investment than Everjoy Health. However, Guangdong Shenglu Telecommunication is 1.19 times less risky than Everjoy Health. It trades about 0.03 of its potential returns per unit of risk. Everjoy Health Group is currently generating about 0.03 per unit of risk. If you would invest  665.00  in Guangdong Shenglu Telecommunication on September 28, 2024 and sell it today you would earn a total of  20.00  from holding Guangdong Shenglu Telecommunication or generate 3.01% return on investment over 90 days.

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

Guangdong Shenglu Telecommunic  vs.  Everjoy Health Group

Guangdong Shenglu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Shenglu Telecommunication are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Shenglu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Everjoy Health Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everjoy Health Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Everjoy Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guangdong Shenglu and Everjoy Health

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

The idea behind Guangdong Shenglu Telecommunication and Everjoy Health Group 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.