Correlation Between Marssenger Kitchenware and Yingde Greatchem

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

Diversification Opportunities for Marssenger Kitchenware and Yingde Greatchem

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Marssenger and Yingde is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Marssenger Kitchenware Co and Yingde Greatchem Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yingde Greatchem Che and Marssenger Kitchenware 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 Marssenger Kitchenware Co are associated (or correlated) with Yingde Greatchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yingde Greatchem Che has no effect on the direction of Marssenger Kitchenware i.e., Marssenger Kitchenware and Yingde Greatchem go up and down completely randomly.

Pair Corralation between Marssenger Kitchenware and Yingde Greatchem

Assuming the 90 days trading horizon Marssenger Kitchenware Co is expected to generate 1.69 times more return on investment than Yingde Greatchem. However, Marssenger Kitchenware is 1.69 times more volatile than Yingde Greatchem Chemicals. It trades about 0.12 of its potential returns per unit of risk. Yingde Greatchem Chemicals is currently generating about 0.04 per unit of risk. If you would invest  1,514  in Marssenger Kitchenware Co on September 13, 2024 and sell it today you would earn a total of  133.00  from holding Marssenger Kitchenware Co or generate 8.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Marssenger Kitchenware Co  vs.  Yingde Greatchem Chemicals

 Performance 
       Timeline  
Marssenger Kitchenware 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Marssenger Kitchenware Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marssenger Kitchenware sustained solid returns over the last few months and may actually be approaching a breakup point.
Yingde Greatchem Che 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Yingde Greatchem Chemicals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yingde Greatchem sustained solid returns over the last few months and may actually be approaching a breakup point.

Marssenger Kitchenware and Yingde Greatchem Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marssenger Kitchenware and Yingde Greatchem

The main advantage of trading using opposite Marssenger Kitchenware and Yingde Greatchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marssenger Kitchenware position performs unexpectedly, Yingde Greatchem 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 Yingde Greatchem will offset losses from the drop in Yingde Greatchem's long position.
The idea behind Marssenger Kitchenware Co and Yingde Greatchem Chemicals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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