Correlation Between Meihua International and Profound Medical
Can any of the company-specific risk be diversified away by investing in both Meihua International and Profound Medical 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 Profound Medical 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 Profound Medical Corp, you can compare the effects of market volatilities on Meihua International and Profound Medical 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 Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meihua International and Profound Medical.
Diversification Opportunities for Meihua International and Profound Medical
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Meihua and Profound is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Meihua International Medical and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp 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 Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Meihua International i.e., Meihua International and Profound Medical go up and down completely randomly.
Pair Corralation between Meihua International and Profound Medical
Given the investment horizon of 90 days Meihua International Medical is expected to under-perform the Profound Medical. In addition to that, Meihua International is 2.02 times more volatile than Profound Medical Corp. It trades about -0.03 of its total potential returns per unit of risk. Profound Medical Corp is currently generating about 0.03 per unit of volatility. If you would invest 674.00 in Profound Medical Corp on September 2, 2024 and sell it today you would earn a total of 138.00 from holding Profound Medical Corp or generate 20.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meihua International Medical vs. Profound Medical Corp
Performance |
| Timeline |
| Meihua International |
| Profound Medical Corp |
Meihua International and Profound Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meihua International and Profound Medical
The main advantage of trading using opposite Meihua International and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meihua International position performs unexpectedly, Profound Medical 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 Profound Medical will offset losses from the drop in Profound Medical's long position.| Meihua International vs. Profound Medical Corp | Meihua International vs. Si Bone | Meihua International vs. Nevro Corp | Meihua International vs. Orthopediatrics Corp |
| Profound Medical vs. Si Bone | Profound Medical vs. Sight Sciences | Profound Medical vs. Nevro Corp | Profound Medical vs. Paragon 28 |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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