Correlation Between Ming Yang and Fujian Boss

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Can any of the company-specific risk be diversified away by investing in both Ming Yang and Fujian Boss 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 Fujian Boss 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 Fujian Boss Software, you can compare the effects of market volatilities on Ming Yang and Fujian Boss 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 Fujian Boss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Yang and Fujian Boss.

Diversification Opportunities for Ming Yang and Fujian Boss

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ming and Fujian is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Fujian Boss Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Boss Software 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 Fujian Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Boss Software has no effect on the direction of Ming Yang i.e., Ming Yang and Fujian Boss go up and down completely randomly.

Pair Corralation between Ming Yang and Fujian Boss

Assuming the 90 days trading horizon Ming Yang Smart is expected to under-perform the Fujian Boss. But the stock apears to be less risky and, when comparing its historical volatility, Ming Yang Smart is 1.06 times less risky than Fujian Boss. The stock trades about -0.14 of its potential returns per unit of risk. The Fujian Boss Software is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,416  in Fujian Boss Software on November 5, 2024 and sell it today you would earn a total of  34.00  from holding Fujian Boss Software or generate 2.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ming Yang Smart  vs.  Fujian Boss Software

 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.
Fujian Boss Software 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fujian Boss Software 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.

Ming Yang and Fujian Boss Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ming Yang and Fujian Boss

The main advantage of trading using opposite Ming Yang and Fujian Boss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Yang position performs unexpectedly, Fujian Boss 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 Fujian Boss will offset losses from the drop in Fujian Boss' long position.
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The idea behind Ming Yang Smart and Fujian Boss Software 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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