Correlation Between Hubei Tech and MayAir Technology

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Can any of the company-specific risk be diversified away by investing in both Hubei Tech and MayAir Technology 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 Hubei Tech and MayAir Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hubei Tech Semiconductors and MayAir Technology Co, you can compare the effects of market volatilities on Hubei Tech and MayAir Technology 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 Hubei Tech with a short position of MayAir Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Tech and MayAir Technology.

Diversification Opportunities for Hubei Tech and MayAir Technology

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hubei and MayAir is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Tech Semiconductors and MayAir Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MayAir Technology and Hubei Tech 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 Hubei Tech Semiconductors are associated (or correlated) with MayAir Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MayAir Technology has no effect on the direction of Hubei Tech i.e., Hubei Tech and MayAir Technology go up and down completely randomly.

Pair Corralation between Hubei Tech and MayAir Technology

Assuming the 90 days trading horizon Hubei Tech Semiconductors is expected to under-perform the MayAir Technology. In addition to that, Hubei Tech is 1.9 times more volatile than MayAir Technology Co. It trades about -0.24 of its total potential returns per unit of risk. MayAir Technology Co is currently generating about -0.05 per unit of volatility. If you would invest  3,483  in MayAir Technology Co on October 28, 2024 and sell it today you would lose (76.00) from holding MayAir Technology Co or give up 2.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Hubei Tech Semiconductors  vs.  MayAir Technology Co

 Performance 
       Timeline  
Hubei Tech Semiconductors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hubei Tech Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
MayAir Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MayAir Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hubei Tech and MayAir Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hubei Tech and MayAir Technology

The main advantage of trading using opposite Hubei Tech and MayAir Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Tech position performs unexpectedly, MayAir Technology 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 MayAir Technology will offset losses from the drop in MayAir Technology's long position.
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The idea behind Hubei Tech Semiconductors and MayAir Technology Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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