Correlation Between Xiangyu Medical and Lotus Health

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

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

Diversification Opportunities for Xiangyu Medical and Lotus Health

0.86

Correlation Coefficient

Xiangyu Medical  Lotus Health

Very poor diversification

The 3 months correlation between Xiangyu and Lotus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyu Medical Co and Lotus Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Health Group and Xiangyu 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 Xiangyu Medical Co are associated (or correlated) with Lotus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Health Group has no effect on the direction of Xiangyu Medical i.e., Xiangyu Medical and Lotus Health go up and down completely randomly.

Pair Corralation between Xiangyu Medical and Lotus Health

Assuming the 90 days trading horizon Xiangyu Medical Co is expected to generate 1.29 times more return on investment than Lotus Health. However, Xiangyu Medical is 1.29 times more volatile than Lotus Health Group. It trades about 0.0 of its potential returns per unit of risk. Lotus Health Group is currently generating about -0.09 per unit of risk. If you would invest  3,172  in Xiangyu Medical Co on September 29, 2024 and sell it today you would lose (50.00) from holding Xiangyu Medical Co or give up 1.58% of portfolio value over 90 days.

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

Xiangyu Medical Co  vs.  Lotus Health Group

Xiangyu Medical

Risk-Adjusted Performance

2 of 100

Weak

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

Lotus Health Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lotus Health Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lotus Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xiangyu Medical and Lotus Health

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

The idea behind Xiangyu Medical Co and Lotus 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.