Correlation Between Ming Yang and Guangdong Qunxing

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

Diversification Opportunities for Ming Yang and Guangdong Qunxing

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ming and Guangdong is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Guangdong Qunxing Toys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Qunxing Toys and Ming Yang 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 Ming Yang Smart are associated (or correlated) with Guangdong Qunxing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Qunxing Toys has no effect on the direction of Ming Yang i.e., Ming Yang and Guangdong Qunxing go up and down completely randomly.

Pair Corralation between Ming Yang and Guangdong Qunxing

Assuming the 90 days trading horizon Ming Yang Smart is expected to generate 0.52 times more return on investment than Guangdong Qunxing. However, Ming Yang Smart is 1.92 times less risky than Guangdong Qunxing. It trades about -0.21 of its potential returns per unit of risk. Guangdong Qunxing Toys is currently generating about -0.22 per unit of risk. If you would invest  1,121  in Ming Yang Smart on November 4, 2024 and sell it today you would lose (83.00) from holding Ming Yang Smart or give up 7.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ming Yang Smart  vs.  Guangdong Qunxing Toys

 Performance 
       Timeline  
Ming Yang Smart 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ming Yang Smart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Guangdong Qunxing Toys 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Qunxing Toys are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Qunxing sustained solid returns over the last few months and may actually be approaching a breakup point.

Ming Yang and Guangdong Qunxing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ming Yang and Guangdong Qunxing

The main advantage of trading using opposite Ming Yang and Guangdong Qunxing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Yang position performs unexpectedly, Guangdong Qunxing 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 Guangdong Qunxing will offset losses from the drop in Guangdong Qunxing's long position.
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The idea behind Ming Yang Smart and Guangdong Qunxing Toys 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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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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