Correlation Between Meihua International and Avinger
Can any of the company-specific risk be diversified away by investing in both Meihua International and Avinger 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 Meihua International and Avinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meihua International Medical and Avinger, you can compare the effects of market volatilities on Meihua International and Avinger 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 Meihua International with a short position of Avinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meihua International and Avinger.
Diversification Opportunities for Meihua International and Avinger
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meihua and Avinger is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Meihua International Medical and Avinger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avinger and Meihua International 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 Meihua International Medical are associated (or correlated) with Avinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avinger has no effect on the direction of Meihua International i.e., Meihua International and Avinger go up and down completely randomly.
Pair Corralation between Meihua International and Avinger
Given the investment horizon of 90 days Meihua International Medical is expected to generate 2.98 times more return on investment than Avinger. However, Meihua International is 2.98 times more volatile than Avinger. It trades about 0.03 of its potential returns per unit of risk. Avinger is currently generating about -0.18 per unit of risk. If you would invest 70.00 in Meihua International Medical on August 24, 2024 and sell it today you would lose (1.00) from holding Meihua International Medical or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meihua International Medical vs. Avinger
Performance |
| Timeline |
| Meihua International |
| Avinger |
Meihua International and Avinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meihua International and Avinger
The main advantage of trading using opposite Meihua International and Avinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meihua International position performs unexpectedly, Avinger 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 Avinger will offset losses from the drop in Avinger's long position.| Meihua International vs. Teleflex Incorporated | Meihua International vs. The Cooper Companies, | Meihua International vs. West Pharmaceutical Services | Meihua International vs. ICU Medical |
| Avinger vs. Teleflex Incorporated | Avinger vs. The Cooper Companies, | Avinger vs. West Pharmaceutical Services | Avinger vs. ICU Medical |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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