Correlation Between Ma Kuang and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Ma Kuang and Chernan Metal 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 Ma Kuang and Chernan Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ma Kuang Healthcare and Chernan Metal Industrial, you can compare the effects of market volatilities on Ma Kuang and Chernan Metal 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 Ma Kuang with a short position of Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ma Kuang and Chernan Metal.
Diversification Opportunities for Ma Kuang and Chernan Metal
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 4139 and Chernan is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial and Ma Kuang 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 Ma Kuang Healthcare are associated (or correlated) with Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Ma Kuang i.e., Ma Kuang and Chernan Metal go up and down completely randomly.
Pair Corralation between Ma Kuang and Chernan Metal
Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to generate 0.62 times more return on investment than Chernan Metal. However, Ma Kuang Healthcare is 1.62 times less risky than Chernan Metal. It trades about 0.04 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about -0.1 per unit of risk. If you would invest 2,985 in Ma Kuang Healthcare on November 3, 2024 and sell it today you would earn a total of 60.00 from holding Ma Kuang Healthcare or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ma Kuang Healthcare vs. Chernan Metal Industrial
Performance |
| Timeline |
| Ma Kuang Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Chernan Metal Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ma Kuang and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ma Kuang and Chernan Metal
The main advantage of trading using opposite Ma Kuang and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ma Kuang position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.The idea behind Ma Kuang Healthcare and Chernan Metal Industrial 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.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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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