Correlation Between MidCap Financial and China Resources
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and China Resources 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 MidCap Financial and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MidCap Financial Investment and China Resources Gas, you can compare the effects of market volatilities on MidCap Financial and China Resources 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 MidCap Financial with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and China Resources.
Diversification Opportunities for MidCap Financial and China Resources
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MidCap and China is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and China Resources Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Gas and MidCap Financial 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 MidCap Financial Investment are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Gas has no effect on the direction of MidCap Financial i.e., MidCap Financial and China Resources go up and down completely randomly.
Pair Corralation between MidCap Financial and China Resources
Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.64 times more return on investment than China Resources. However, MidCap Financial Investment is 1.57 times less risky than China Resources. It trades about 0.06 of its potential returns per unit of risk. China Resources Gas is currently generating about -0.39 per unit of risk. If you would invest 1,320 in MidCap Financial Investment on November 2, 2024 and sell it today you would earn a total of 18.00 from holding MidCap Financial Investment or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. China Resources Gas
Performance |
| Timeline |
| MidCap Financial Inv |
| China Resources Gas |
MidCap Financial and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and China Resources
The main advantage of trading using opposite MidCap Financial and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| MidCap Financial vs. Autohome ADR | MidCap Financial vs. The Home Depot | MidCap Financial vs. Addus HomeCare | MidCap Financial vs. MHP Hotel AG |
| China Resources vs. High Liner Foods | China Resources vs. PURE FOODS TASMANIA | China Resources vs. Maple Leaf Foods | China Resources vs. PATTIES FOODS |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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