Correlation Between Humanwell Healthcare and Cultural Investment

Can any of the company-specific risk be diversified away by investing in both Humanwell Healthcare and Cultural Investment 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 Humanwell Healthcare and Cultural Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humanwell Healthcare Group and Cultural Investment Holdings, you can compare the effects of market volatilities on Humanwell Healthcare and Cultural Investment 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 Humanwell Healthcare with a short position of Cultural Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humanwell Healthcare and Cultural Investment.

Diversification Opportunities for Humanwell Healthcare and Cultural Investment

0.64

Correlation Coefficient

Humanwell Healthcare  Cultural Investment

Poor diversification

The 3 months correlation between Humanwell and Cultural is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Humanwell Healthcare Group and Cultural Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cultural Investment and Humanwell Healthcare 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 Humanwell Healthcare Group are associated (or correlated) with Cultural Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cultural Investment has no effect on the direction of Humanwell Healthcare i.e., Humanwell Healthcare and Cultural Investment go up and down completely randomly.

Pair Corralation between Humanwell Healthcare and Cultural Investment

Assuming the 90 days trading horizon Humanwell Healthcare Group is expected to generate 0.91 times more return on investment than Cultural Investment. However, Humanwell Healthcare Group is 1.1 times less risky than Cultural Investment. It trades about 0.26 of its potential returns per unit of risk. Cultural Investment Holdings is currently generating about 0.13 per unit of risk. If you would invest  1,643  in Humanwell Healthcare Group on September 12, 2024 and sell it today you would earn a total of  769.00  from holding Humanwell Healthcare Group or generate 46.8% return on investment over 90 days.

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

Humanwell Healthcare Group  vs.  Cultural Investment Holdings

Humanwell Healthcare

Risk-Adjusted Performance

20 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Humanwell Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Cultural Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humanwell Healthcare and Cultural Investment

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

The idea behind Humanwell Healthcare Group and Cultural Investment Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.