Correlation Between National Beverage and Huaizhong Health

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

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

Diversification Opportunities for National Beverage and Huaizhong Health

0.0

Correlation Coefficient

National Beverage  Huaizhong Health

Pay attention - limited upside

The 3 months correlation between National and Huaizhong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Huaizhong Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaizhong Health and National Beverage 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 National Beverage Corp are associated (or correlated) with Huaizhong Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaizhong Health has no effect on the direction of National Beverage i.e., National Beverage and Huaizhong Health go up and down completely randomly.

Pair Corralation between National Beverage and Huaizhong Health

If you would invest  4,770  in National Beverage Corp on September 3, 2024 and sell it today you would earn a total of  169.00  from holding National Beverage Corp or generate 3.54% return on investment over 90 days.

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

National Beverage Corp  vs.  Huaizhong Health Group

National Beverage Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Huaizhong Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaizhong Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Huaizhong Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Beverage and Huaizhong Health

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

The idea behind National Beverage Corp and Huaizhong 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.