Correlation Between Winner Medical and Dongxing Sec

Can any of the company-specific risk be diversified away by investing in both Winner Medical and Dongxing Sec 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 Winner Medical and Dongxing Sec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Winner Medical Co and Dongxing Sec Co, you can compare the effects of market volatilities on Winner Medical and Dongxing Sec 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 Winner Medical with a short position of Dongxing Sec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winner Medical and Dongxing Sec.

Diversification Opportunities for Winner Medical and Dongxing Sec

0.84

Correlation Coefficient

Winner Medical  Dongxing Sec

Very poor diversification

The 3 months correlation between Winner and Dongxing is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Winner Medical Co and Dongxing Sec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongxing Sec and Winner Medical 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 Winner Medical Co are associated (or correlated) with Dongxing Sec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongxing Sec has no effect on the direction of Winner Medical i.e., Winner Medical and Dongxing Sec go up and down completely randomly.

Pair Corralation between Winner Medical and Dongxing Sec

Assuming the 90 days trading horizon Winner Medical Co is expected to generate 1.1 times more return on investment than Dongxing Sec. However, Winner Medical is 1.1 times more volatile than Dongxing Sec Co. It trades about 0.25 of its potential returns per unit of risk. Dongxing Sec Co is currently generating about 0.18 per unit of risk. If you would invest  2,372  in Winner Medical Co on September 15, 2024 and sell it today you would earn a total of  1,864  from holding Winner Medical Co or generate 78.58% return on investment over 90 days.

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

Winner Medical Co  vs.  Dongxing Sec Co

Winner Medical

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Winner Medical Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Winner Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Dongxing Sec

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dongxing Sec Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongxing Sec sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winner Medical and Dongxing Sec

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

The idea behind Winner Medical Co and Dongxing Sec Co 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 Stocks Directory module to find actively traded stocks across global markets.