Correlation Between Shuhua Sports and Ming Yang

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

Diversification Opportunities for Shuhua Sports and Ming Yang

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Shuhua and Ming is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shuhua Sports Co and Ming Yang Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Yang Smart and Shuhua Sports 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 Shuhua Sports Co are associated (or correlated) with Ming Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Yang Smart has no effect on the direction of Shuhua Sports i.e., Shuhua Sports and Ming Yang go up and down completely randomly.

Pair Corralation between Shuhua Sports and Ming Yang

Assuming the 90 days trading horizon Shuhua Sports Co is expected to generate 2.28 times more return on investment than Ming Yang. However, Shuhua Sports is 2.28 times more volatile than Ming Yang Smart. It trades about 0.11 of its potential returns per unit of risk. Ming Yang Smart is currently generating about 0.12 per unit of risk. If you would invest  889.00  in Shuhua Sports Co on November 9, 2024 and sell it today you would earn a total of  52.00  from holding Shuhua Sports Co or generate 5.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shuhua Sports Co  vs.  Ming Yang Smart

 Performance 
       Timeline  
Shuhua Sports 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Over the last 90 days Shuhua Sports Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Shuhua Sports sustained solid returns over the last few months and may actually be approaching a breakup point.
Ming Yang Smart 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.

Shuhua Sports and Ming Yang Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shuhua Sports and Ming Yang

The main advantage of trading using opposite Shuhua Sports and Ming Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shuhua Sports position performs unexpectedly, Ming Yang 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 Ming Yang will offset losses from the drop in Ming Yang's long position.
The idea behind Shuhua Sports Co and Ming Yang Smart 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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