Correlation Between Meinian Onehealth and Wuliangye Yibin

Can any of the company-specific risk be diversified away by investing in both Meinian Onehealth and Wuliangye Yibin 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 Meinian Onehealth and Wuliangye Yibin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Meinian Onehealth Healthcare and Wuliangye Yibin Co, you can compare the effects of market volatilities on Meinian Onehealth and Wuliangye Yibin 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 Meinian Onehealth with a short position of Wuliangye Yibin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meinian Onehealth and Wuliangye Yibin.

Diversification Opportunities for Meinian Onehealth and Wuliangye Yibin

0.25

Correlation Coefficient

Meinian Onehealth  Wuliangye Yibin

Modest diversification

The 3 months correlation between Meinian and Wuliangye is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Meinian Onehealth Healthcare and Wuliangye Yibin Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuliangye Yibin and Meinian Onehealth 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 Meinian Onehealth Healthcare are associated (or correlated) with Wuliangye Yibin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuliangye Yibin has no effect on the direction of Meinian Onehealth i.e., Meinian Onehealth and Wuliangye Yibin go up and down completely randomly.

Pair Corralation between Meinian Onehealth and Wuliangye Yibin

Assuming the 90 days trading horizon Meinian Onehealth Healthcare is expected to under-perform the Wuliangye Yibin. In addition to that, Meinian Onehealth is 1.62 times more volatile than Wuliangye Yibin Co. It trades about -0.44 of its total potential returns per unit of risk. Wuliangye Yibin Co is currently generating about -0.56 per unit of volatility. If you would invest  14,910  in Wuliangye Yibin Co on October 11, 2024 and sell it today you would lose (1,940) from holding Wuliangye Yibin Co or give up 13.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Meinian Onehealth Healthcare  vs.  Wuliangye Yibin Co

Meinian Onehealth

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meinian Onehealth Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meinian Onehealth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wuliangye Yibin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wuliangye Yibin Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Meinian Onehealth and Wuliangye Yibin

The main advantage of trading using opposite Meinian Onehealth and Wuliangye Yibin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meinian Onehealth position performs unexpectedly, Wuliangye Yibin 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 Wuliangye Yibin will offset losses from the drop in Wuliangye Yibin's long position.

The idea behind Meinian Onehealth Healthcare and Wuliangye Yibin 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.