Correlation Between Cowealth Medical and Chengdu B

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

By analyzing existing cross correlation between Cowealth Medical China and Chengdu B ray Media, you can compare the effects of market volatilities on Cowealth Medical and Chengdu B 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 Cowealth Medical with a short position of Chengdu B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cowealth Medical and Chengdu B.

Diversification Opportunities for Cowealth Medical and Chengdu B

0.93

Correlation Coefficient

Cowealth Medical  Chengdu B

Almost no diversification

The 3 months correlation between Cowealth and Chengdu is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cowealth Medical China and Chengdu B ray Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu B ray and Cowealth 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 Cowealth Medical China are associated (or correlated) with Chengdu B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu B ray has no effect on the direction of Cowealth Medical i.e., Cowealth Medical and Chengdu B go up and down completely randomly.

Pair Corralation between Cowealth Medical and Chengdu B

Assuming the 90 days trading horizon Cowealth Medical is expected to generate 1.03 times less return on investment than Chengdu B. In addition to that, Cowealth Medical is 1.1 times more volatile than Chengdu B ray Media. It trades about 0.18 of its total potential returns per unit of risk. Chengdu B ray Media is currently generating about 0.21 per unit of volatility. If you would invest  359.00  in Chengdu B ray Media on September 12, 2024 and sell it today you would earn a total of  161.00  from holding Chengdu B ray Media or generate 44.85% return on investment over 90 days.

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

Cowealth Medical China  vs.  Chengdu B ray Media

Cowealth Medical China

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cowealth Medical China are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cowealth Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Chengdu B ray

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chengdu B ray Media are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengdu B sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cowealth Medical and Chengdu B

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

The idea behind Cowealth Medical China and Chengdu B ray Media 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.