Correlation Between Global Blockchain and China Health

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

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

Diversification Opportunities for Global Blockchain and China Health

-0.07

Correlation Coefficient

Global Blockchain  China Health

Good diversification

The 3 months correlation between Global and China is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global Blockchain Acquisition and China Health Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Management and Global Blockchain 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 Global Blockchain Acquisition are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Management has no effect on the direction of Global Blockchain i.e., Global Blockchain and China Health go up and down completely randomly.

Pair Corralation between Global Blockchain and China Health

Given the investment horizon of 90 days Global Blockchain is expected to generate 204.38 times less return on investment than China Health. But when comparing it to its historical volatility, Global Blockchain Acquisition is 15.72 times less risky than China Health. It trades about 0.0 of its potential returns per unit of risk. China Health Management is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.41  in China Health Management on September 23, 2024 and sell it today you would lose (0.01) from holding China Health Management or give up 2.44% of portfolio value over 90 days.

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

Global Blockchain Acquisition  vs.  China Health Management

Global Blockchain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Blockchain Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Global Blockchain is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 abnormal technical indicators, China Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Blockchain and China Health

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

The idea behind Global Blockchain Acquisition and China Health Management 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.