Correlation Between Meiloon Industrial and Great China
Can any of the company-specific risk be diversified away by investing in both Meiloon Industrial and Great China 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 Meiloon Industrial and Great China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meiloon Industrial Co and Great China Metal, you can compare the effects of market volatilities on Meiloon Industrial and Great China 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 Meiloon Industrial with a short position of Great China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiloon Industrial and Great China.
Diversification Opportunities for Meiloon Industrial and Great China
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meiloon and Great is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Meiloon Industrial Co and Great China Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great China Metal and Meiloon Industrial 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 Meiloon Industrial Co are associated (or correlated) with Great China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great China Metal has no effect on the direction of Meiloon Industrial i.e., Meiloon Industrial and Great China go up and down completely randomly.
Pair Corralation between Meiloon Industrial and Great China
Assuming the 90 days trading horizon Meiloon Industrial Co is expected to under-perform the Great China. In addition to that, Meiloon Industrial is 5.5 times more volatile than Great China Metal. It trades about -0.25 of its total potential returns per unit of risk. Great China Metal is currently generating about 0.04 per unit of volatility. If you would invest 2,285 in Great China Metal on September 5, 2024 and sell it today you would earn a total of 10.00 from holding Great China Metal or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Meiloon Industrial Co vs. Great China Metal
Performance |
| Timeline |
| Meiloon Industrial |
| Great China Metal |
Meiloon Industrial and Great China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiloon Industrial and Great China
The main advantage of trading using opposite Meiloon Industrial and Great China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiloon Industrial position performs unexpectedly, Great China 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 Great China will offset losses from the drop in Great China's long position.| Meiloon Industrial vs. Hanpin Electron Co | Meiloon Industrial vs. Stark Technology | Meiloon Industrial vs. Ichia Technologies | Meiloon Industrial vs. Zinwell |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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