Correlation Between Mango Excellent and Chengdu Xinzhu

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

Diversification Opportunities for Mango Excellent and Chengdu Xinzhu

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Mango and Chengdu is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mango Excellent Media and Chengdu Xinzhu RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xinzhu RoadBridge and Mango Excellent 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 Mango Excellent Media are associated (or correlated) with Chengdu Xinzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xinzhu RoadBridge has no effect on the direction of Mango Excellent i.e., Mango Excellent and Chengdu Xinzhu go up and down completely randomly.

Pair Corralation between Mango Excellent and Chengdu Xinzhu

Assuming the 90 days trading horizon Mango Excellent is expected to generate 13.8 times less return on investment than Chengdu Xinzhu. But when comparing it to its historical volatility, Mango Excellent Media is 2.17 times less risky than Chengdu Xinzhu. It trades about 0.01 of its potential returns per unit of risk. Chengdu Xinzhu RoadBridge is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Chengdu Xinzhu RoadBridge on October 28, 2024 and sell it today you would earn a total of  15.00  from holding Chengdu Xinzhu RoadBridge or generate 2.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Mango Excellent Media  vs.  Chengdu Xinzhu RoadBridge

 Performance 
       Timeline  
Mango Excellent Media 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Mango Excellent Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mango Excellent may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Chengdu Xinzhu RoadBridge 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Chengdu Xinzhu RoadBridge are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengdu Xinzhu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mango Excellent and Chengdu Xinzhu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mango Excellent and Chengdu Xinzhu

The main advantage of trading using opposite Mango Excellent and Chengdu Xinzhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mango Excellent position performs unexpectedly, Chengdu Xinzhu 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 Chengdu Xinzhu will offset losses from the drop in Chengdu Xinzhu's long position.
The idea behind Mango Excellent Media and Chengdu Xinzhu RoadBridge 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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