Correlation Between Humanwell Healthcare and China Citic

Can any of the company-specific risk be diversified away by investing in both Humanwell Healthcare and China Citic 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 China Citic 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 China Citic Bank, you can compare the effects of market volatilities on Humanwell Healthcare and China Citic 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 China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humanwell Healthcare and China Citic.

Diversification Opportunities for Humanwell Healthcare and China Citic

0.82

Correlation Coefficient

Humanwell Healthcare  China Citic

Very poor diversification

The 3 months correlation between Humanwell and China is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Humanwell Healthcare Group and China Citic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Citic Bank 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 China Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Citic Bank has no effect on the direction of Humanwell Healthcare i.e., Humanwell Healthcare and China Citic go up and down completely randomly.

Pair Corralation between Humanwell Healthcare and China Citic

Assuming the 90 days trading horizon Humanwell Healthcare Group is expected to generate 1.33 times more return on investment than China Citic. However, Humanwell Healthcare is 1.33 times more volatile than China Citic Bank. It trades about 0.17 of its potential returns per unit of risk. China Citic Bank is currently generating about 0.04 per unit of risk. If you would invest  1,854  in Humanwell Healthcare Group on September 26, 2024 and sell it today you would earn a total of  519.00  from holding Humanwell Healthcare Group or generate 27.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Humanwell Healthcare Group  vs.  China Citic Bank

Humanwell Healthcare

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Humanwell Healthcare Group are ranked lower than 13 (%) 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.

China Citic Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Citic Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Citic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Humanwell Healthcare and China Citic

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

The idea behind Humanwell Healthcare Group and China Citic Bank 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.