Can any of the company-specific risk be diversified away by investing in both Ziff Davis and Haoxi 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 Ziff Davis and Haoxi Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ziff Davis and Haoxi Health Technology, you can compare the effects of market volatilities on Ziff Davis and Haoxi 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 Ziff Davis with a short position of Haoxi Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ziff Davis and Haoxi Health.
Diversification Opportunities for Ziff Davis and Haoxi Health
The 3 months correlation between Ziff and Haoxi is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis and Haoxi Health Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haoxi Health Technology and Ziff Davis 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 Ziff Davis are associated (or correlated) with Haoxi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haoxi Health Technology has no effect on the direction of Ziff Davis i.e., Ziff Davis and Haoxi Health go up and down completely randomly.
Pair Corralation between Ziff Davis and Haoxi Health
Allowing for the 90-day total investment horizon Ziff Davis is expected to under-perform the Haoxi Health. But the stock apears to be less risky and, when comparing its historical volatility, Ziff Davis is 3.92 times less risky than Haoxi Health. The stock trades about -0.01 of its potential returns per unit of risk. The Haoxi Health Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 452.00 in Haoxi Health Technology on March 6, 2024 and sell it today you would earn a total of 262.00 from holding Haoxi Health Technology or generate 57.96% return on investment over 90 days.
Over the last 90 days Ziff Davis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Compared to the overall equity markets, risk-adjusted returns on investments in Haoxi Health Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Haoxi Health displayed solid returns over the last few months and may actually be approaching a breakup point.