Correlation Between Regional Health and JD Health

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

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

Diversification Opportunities for Regional Health and JD Health

-0.56

Correlation Coefficient

Regional Health  JD Health

Excellent diversification

The 3 months correlation between Regional and JDHIY is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Regional Health Properties and JD Health International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Health International and Regional 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 Regional Health Properties are associated (or correlated) with JD Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Health International has no effect on the direction of Regional Health i.e., Regional Health and JD Health go up and down completely randomly.

Pair Corralation between Regional Health and JD Health

Considering the 90-day investment horizon Regional Health Properties is expected to generate 2.14 times more return on investment than JD Health. However, Regional Health is 2.14 times more volatile than JD Health International. It trades about 0.0 of its potential returns per unit of risk. JD Health International is currently generating about -0.03 per unit of risk. If you would invest  212.00  in Regional Health Properties on September 24, 2024 and sell it today you would lose (61.00) from holding Regional Health Properties or give up 28.77% of portfolio value over 90 days.

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

Regional Health Properties  vs.  JD Health International

Regional Health Prop

Risk-Adjusted Performance

0 of 100

Very Weak

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

JD Health International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Health International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, JD Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regional Health and JD Health

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

The idea behind Regional Health Properties and JD Health International 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.