Correlation Between Ma Kuang and Tainet Communication
Can any of the company-specific risk be diversified away by investing in both Ma Kuang and Tainet Communication 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 Tainet Communication 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 Tainet Communication System, you can compare the effects of market volatilities on Ma Kuang and Tainet Communication 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 Tainet Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ma Kuang and Tainet Communication.
Diversification Opportunities for Ma Kuang and Tainet Communication
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between 4139 and Tainet is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and Tainet Communication System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainet Communication 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 Tainet Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainet Communication has no effect on the direction of Ma Kuang i.e., Ma Kuang and Tainet Communication go up and down completely randomly.
Pair Corralation between Ma Kuang and Tainet Communication
Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to under-perform the Tainet Communication. But the stock apears to be less risky and, when comparing its historical volatility, Ma Kuang Healthcare is 1.57 times less risky than Tainet Communication. The stock trades about -0.1 of its potential returns per unit of risk. The Tainet Communication System is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,760 in Tainet Communication System on November 7, 2024 and sell it today you would lose (10.00) from holding Tainet Communication System or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ma Kuang Healthcare vs. Tainet Communication System
Performance |
| Timeline |
| Ma Kuang Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Tainet Communication |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ma Kuang and Tainet Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ma Kuang and Tainet Communication
The main advantage of trading using opposite Ma Kuang and Tainet Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ma Kuang position performs unexpectedly, Tainet Communication 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 Tainet Communication will offset losses from the drop in Tainet Communication's long position.The idea behind Ma Kuang Healthcare and Tainet Communication System 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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