Correlation Between Allstar Health and China Jo

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

By analyzing existing cross correlation between Allstar Health Brands and China Jo Jo Drugstores, you can compare the effects of market volatilities on Allstar Health and China Jo 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 Allstar Health with a short position of China Jo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstar Health and China Jo.

Diversification Opportunities for Allstar Health and China Jo

0.05

Correlation Coefficient

Allstar Health  China Jo

Significant diversification

The 3 months correlation between Allstar and China is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Allstar Health Brands and China Jo Jo Drugstores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Jo Jo and Allstar Health 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 Allstar Health Brands are associated (or correlated) with China Jo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Jo Jo has no effect on the direction of Allstar Health i.e., Allstar Health and China Jo go up and down completely randomly.

Pair Corralation between Allstar Health and China Jo

Given the investment horizon of 90 days Allstar Health is expected to generate 112.11 times less return on investment than China Jo. In addition to that, Allstar Health is 1.1 times more volatile than China Jo Jo Drugstores. It trades about 0.0 of its total potential returns per unit of risk. China Jo Jo Drugstores is currently generating about 0.09 per unit of volatility. If you would invest  162.00  in China Jo Jo Drugstores on August 30, 2024 and sell it today you would earn a total of  47.00  from holding China Jo Jo Drugstores or generate 29.01% return on investment over 90 days.

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

Allstar Health Brands  vs.  China Jo Jo Drugstores

Allstar Health Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allstar Health Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allstar Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

China Jo Jo

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Jo Jo Drugstores are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, China Jo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allstar Health and China Jo

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

The idea behind Allstar Health Brands and China Jo Jo Drugstores 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.