Correlation Between CNFinance Holdings and Health

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

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

Diversification Opportunities for CNFinance Holdings and Health

-0.68

Correlation Coefficient

CNFinance Holdings  Health

Excellent diversification

The 3 months correlation between CNFinance and Health is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Health and Happiness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health and Happiness and CNFinance Holdings 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 CNFinance Holdings are associated (or correlated) with Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health and Happiness has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and Health go up and down completely randomly.

Pair Corralation between CNFinance Holdings and Health

If you would invest  119.00  in Health and Happiness on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Health and Happiness or generate 0.0% return on investment over 90 days.

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

CNFinance Holdings  vs.  Health and Happiness

CNFinance Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNFinance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Health and Happiness

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Health and Happiness are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CNFinance Holdings and Health

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

The idea behind CNFinance Holdings and Health and Happiness 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.