Correlation Between Meinian Onehealth and Shenzhen Noposion

Can any of the company-specific risk be diversified away by investing in both Meinian Onehealth and Shenzhen Noposion 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 Shenzhen Noposion 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 Shenzhen Noposion Agrochemicals, you can compare the effects of market volatilities on Meinian Onehealth and Shenzhen Noposion 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 Shenzhen Noposion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meinian Onehealth and Shenzhen Noposion.

Diversification Opportunities for Meinian Onehealth and Shenzhen Noposion

-0.54

Correlation Coefficient

Meinian Onehealth  Shenzhen Noposion

Excellent diversification

The 3 months correlation between Meinian and Shenzhen is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Meinian Onehealth Healthcare and Shenzhen Noposion Agrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Noposion 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 Shenzhen Noposion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Noposion has no effect on the direction of Meinian Onehealth i.e., Meinian Onehealth and Shenzhen Noposion go up and down completely randomly.

Pair Corralation between Meinian Onehealth and Shenzhen Noposion

Assuming the 90 days trading horizon Meinian Onehealth Healthcare is expected to generate 1.35 times more return on investment than Shenzhen Noposion. However, Meinian Onehealth is 1.35 times more volatile than Shenzhen Noposion Agrochemicals. It trades about 0.17 of its potential returns per unit of risk. Shenzhen Noposion Agrochemicals is currently generating about -0.05 per unit of risk. If you would invest  486.00  in Meinian Onehealth Healthcare on December 4, 2024 and sell it today you would earn a total of  182.00  from holding Meinian Onehealth Healthcare or generate 37.45% return on investment over 90 days.

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

Meinian Onehealth Healthcare  vs.  Shenzhen Noposion Agrochemical

Meinian Onehealth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meinian Onehealth Healthcare are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meinian Onehealth sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Noposion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Noposion Agrochemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Meinian Onehealth and Shenzhen Noposion

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

The idea behind Meinian Onehealth Healthcare and Shenzhen Noposion Agrochemicals 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.