Correlation Between Avinger and Meihua International
Can any of the company-specific risk be diversified away by investing in both Avinger and Meihua International 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 Avinger and Meihua International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avinger and Meihua International Medical, you can compare the effects of market volatilities on Avinger and Meihua International 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 Avinger with a short position of Meihua International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avinger and Meihua International.
Diversification Opportunities for Avinger and Meihua International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avinger and Meihua is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Avinger and Meihua International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meihua International and Avinger 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 Avinger are associated (or correlated) with Meihua International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meihua International has no effect on the direction of Avinger i.e., Avinger and Meihua International go up and down completely randomly.
Pair Corralation between Avinger and Meihua International
Given the investment horizon of 90 days Avinger is expected to generate 0.32 times more return on investment than Meihua International. However, Avinger is 3.08 times less risky than Meihua International. It trades about -0.02 of its potential returns per unit of risk. Meihua International Medical is currently generating about -0.07 per unit of risk. If you would invest 82.00 in Avinger on August 27, 2024 and sell it today you would lose (2.00) from holding Avinger or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avinger vs. Meihua International Medical
Performance |
| Timeline |
| Avinger |
| Meihua International |
Avinger and Meihua International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avinger and Meihua International
The main advantage of trading using opposite Avinger and Meihua International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avinger position performs unexpectedly, Meihua International 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 Meihua International will offset losses from the drop in Meihua International's long position.| Avinger vs. GlucoTrack | Avinger vs. Nexgel Inc | Avinger vs. Sharps Technology | Avinger vs. Innovative Eyewear |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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