Correlation Between Home Plate and China Health

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

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

Diversification Opportunities for Home Plate and China Health

-0.48

Correlation Coefficient

Home Plate  China Health

Very good diversification

The 3 months correlation between Home and China is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Home Plate 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 Home Plate 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 Home Plate 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 Home Plate i.e., Home Plate and China Health go up and down completely randomly.

Pair Corralation between Home Plate and China Health

If you would invest  1,030  in Home Plate Acquisition on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Home Plate Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Home Plate Acquisition  vs.  China Health Management

Home Plate Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 inconsistent 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.

Pair Trading with Home Plate and China Health

The main advantage of trading using opposite Home Plate and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Plate 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 Home Plate 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.