Correlation Between China Health and Sprott Physical

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

Diversification Opportunities for China Health and Sprott Physical

-0.21

Correlation Coefficient

China Health  Sprott Physical

Very good diversification

The 3 months correlation between China and Sprott is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of China Health i.e., China Health and Sprott Physical go up and down completely randomly.

Pair Corralation between China Health and Sprott Physical

Given the investment horizon of 90 days China Health Management is expected to under-perform the Sprott Physical. In addition to that, China Health is 6.97 times more volatile than Sprott Physical Gold. It trades about -0.14 of its total potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.16 per unit of volatility. If you would invest  1,966  in Sprott Physical Gold on September 15, 2024 and sell it today you would earn a total of  74.00  from holding Sprott Physical Gold or generate 3.76% return on investment over 90 days.

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

China Health Management  vs.  Sprott Physical Gold

China Health Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Health Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sprott Physical Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with China Health and Sprott Physical

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

The idea behind China Health Management and Sprott Physical Gold 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.