Correlation Between Aurora Optoelectronics and Hangzhou Minsheng
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By analyzing existing cross correlation between Aurora Optoelectronics Co and Hangzhou Minsheng Healthcare, you can compare the effects of market volatilities on Aurora Optoelectronics and Hangzhou Minsheng 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 Aurora Optoelectronics with a short position of Hangzhou Minsheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Optoelectronics and Hangzhou Minsheng.
Diversification Opportunities for Aurora Optoelectronics and Hangzhou Minsheng
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Hangzhou is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Optoelectronics Co and Hangzhou Minsheng Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Minsheng and Aurora Optoelectronics 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 Aurora Optoelectronics Co are associated (or correlated) with Hangzhou Minsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Minsheng has no effect on the direction of Aurora Optoelectronics i.e., Aurora Optoelectronics and Hangzhou Minsheng go up and down completely randomly.
Pair Corralation between Aurora Optoelectronics and Hangzhou Minsheng
Assuming the 90 days trading horizon Aurora Optoelectronics Co is expected to under-perform the Hangzhou Minsheng. In addition to that, Aurora Optoelectronics is 2.38 times more volatile than Hangzhou Minsheng Healthcare. It trades about -0.06 of its total potential returns per unit of risk. Hangzhou Minsheng Healthcare is currently generating about 0.08 per unit of volatility. If you would invest 1,218 in Hangzhou Minsheng Healthcare on November 7, 2024 and sell it today you would earn a total of 19.00 from holding Hangzhou Minsheng Healthcare or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Optoelectronics Co vs. Hangzhou Minsheng Healthcare
Performance |
| Timeline |
| Aurora Optoelectronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hangzhou Minsheng |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aurora Optoelectronics and Hangzhou Minsheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Optoelectronics and Hangzhou Minsheng
The main advantage of trading using opposite Aurora Optoelectronics and Hangzhou Minsheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Optoelectronics position performs unexpectedly, Hangzhou Minsheng 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 Hangzhou Minsheng will offset losses from the drop in Hangzhou Minsheng's long position.The idea behind Aurora Optoelectronics Co and Hangzhou Minsheng Healthcare 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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