Correlation Between China Medical and Television Broadcasts

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

By analyzing existing cross correlation between China Medical System and Television Broadcasts Limited, you can compare the effects of market volatilities on China Medical and Television Broadcasts 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 China Medical with a short position of Television Broadcasts. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Medical and Television Broadcasts.

Diversification Opportunities for China Medical and Television Broadcasts

0.69

Correlation Coefficient

China Medical  Television Broadcasts

Poor diversification

The 3 months correlation between China and Television is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Medical System and Television Broadcasts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Television Broadcasts and China Medical 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 China Medical System are associated (or correlated) with Television Broadcasts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Television Broadcasts has no effect on the direction of China Medical i.e., China Medical and Television Broadcasts go up and down completely randomly.

Pair Corralation between China Medical and Television Broadcasts

Assuming the 90 days trading horizon China Medical System is expected to generate 0.99 times more return on investment than Television Broadcasts. However, China Medical System is 1.01 times less risky than Television Broadcasts. It trades about 0.24 of its potential returns per unit of risk. Television Broadcasts Limited is currently generating about 0.2 per unit of risk. If you would invest  93.00  in China Medical System on April 25, 2025 and sell it today you would earn a total of  45.00  from holding China Medical System or generate 48.39% return on investment over 90 days.

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

China Medical System  vs.  Television Broadcasts Limited

China Medical System

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in China Medical System are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Television Broadcasts

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Television Broadcasts Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Television Broadcasts unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Medical and Television Broadcasts

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

The idea behind China Medical System and Television Broadcasts Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.