Correlation Between Great China and Meiloon Industrial
Can any of the company-specific risk be diversified away by investing in both Great China and Meiloon Industrial 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 Great China and Meiloon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great China Metal and Meiloon Industrial Co, you can compare the effects of market volatilities on Great China and Meiloon Industrial 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 Great China with a short position of Meiloon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great China and Meiloon Industrial.
Diversification Opportunities for Great China and Meiloon Industrial
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Meiloon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Great China Metal and Meiloon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiloon Industrial and Great China 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 Great China Metal are associated (or correlated) with Meiloon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiloon Industrial has no effect on the direction of Great China i.e., Great China and Meiloon Industrial go up and down completely randomly.
Pair Corralation between Great China and Meiloon Industrial
Assuming the 90 days trading horizon Great China Metal is expected to generate 0.18 times more return on investment than Meiloon Industrial. However, Great China Metal is 5.5 times less risky than Meiloon Industrial. It trades about 0.04 of its potential returns per unit of risk. Meiloon Industrial Co is currently generating about -0.25 per unit of risk. If you would invest 2,285 in Great China Metal on September 5, 2024 and sell it today you would earn a total of 10.00 from holding Great China Metal or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Great China Metal vs. Meiloon Industrial Co
Performance |
| Timeline |
| Great China Metal |
| Meiloon Industrial |
Great China and Meiloon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great China and Meiloon Industrial
The main advantage of trading using opposite Great China and Meiloon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great China position performs unexpectedly, Meiloon Industrial 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 Meiloon Industrial will offset losses from the drop in Meiloon Industrial's long position.The idea behind Great China Metal and Meiloon Industrial Co 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.| Meiloon Industrial vs. Hanpin Electron Co | Meiloon Industrial vs. Stark Technology | Meiloon Industrial vs. Ichia Technologies | Meiloon Industrial vs. Zinwell |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |