Correlation Between China Health and Growlife

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

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

Diversification Opportunities for China Health and Growlife

0.02

Correlation Coefficient

China Health  Growlife

Significant diversification

The 3 months correlation between China and Growlife is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and Growlife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growlife and China 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 China Health Management are associated (or correlated) with Growlife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growlife has no effect on the direction of China Health i.e., China Health and Growlife go up and down completely randomly.

Pair Corralation between China Health and Growlife

If you would invest  0.01  in Growlife on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Growlife or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

China Health Management  vs.  Growlife

China Health Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Health Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, China Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Growlife

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Growlife are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Growlife unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Health and Growlife

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

The idea behind China Health Management and Growlife 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.