Correlation Between TWOWAY Communications and Ma Kuang
Can any of the company-specific risk be diversified away by investing in both TWOWAY Communications and Ma Kuang 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 TWOWAY Communications and Ma Kuang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TWOWAY Communications and Ma Kuang Healthcare, you can compare the effects of market volatilities on TWOWAY Communications and Ma Kuang 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 TWOWAY Communications with a short position of Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of TWOWAY Communications and Ma Kuang.
Diversification Opportunities for TWOWAY Communications and Ma Kuang
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between TWOWAY and 4139 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding TWOWAY Communications and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare and TWOWAY Communications 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 TWOWAY Communications are associated (or correlated) with Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of TWOWAY Communications i.e., TWOWAY Communications and Ma Kuang go up and down completely randomly.
Pair Corralation between TWOWAY Communications and Ma Kuang
Assuming the 90 days trading horizon TWOWAY Communications is expected to generate 3.18 times more return on investment than Ma Kuang. However, TWOWAY Communications is 3.18 times more volatile than Ma Kuang Healthcare. It trades about 0.2 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about 0.04 per unit of risk. If you would invest 8,550 in TWOWAY Communications on November 3, 2024 and sell it today you would earn a total of 3,150 from holding TWOWAY Communications or generate 36.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TWOWAY Communications vs. Ma Kuang Healthcare
Performance |
| Timeline |
| TWOWAY Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Ma Kuang Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
TWOWAY Communications and Ma Kuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TWOWAY Communications and Ma Kuang
The main advantage of trading using opposite TWOWAY Communications and Ma Kuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TWOWAY Communications position performs unexpectedly, Ma Kuang 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 Ma Kuang will offset losses from the drop in Ma Kuang's long position.The idea behind TWOWAY Communications and Ma Kuang 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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