Correlation Between Shenzhen MTC and JuneYao Dairy

Can any of the company-specific risk be diversified away by investing in both Shenzhen MTC and JuneYao Dairy 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 Shenzhen MTC and JuneYao Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen MTC Co and JuneYao Dairy Co, you can compare the effects of market volatilities on Shenzhen MTC and JuneYao Dairy 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 Shenzhen MTC with a short position of JuneYao Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen MTC and JuneYao Dairy.

Diversification Opportunities for Shenzhen MTC and JuneYao Dairy

-0.13

Correlation Coefficient

Shenzhen MTC  JuneYao Dairy

Good diversification

The 3 months correlation between Shenzhen and JuneYao is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen MTC Co and JuneYao Dairy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JuneYao Dairy and Shenzhen MTC 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 Shenzhen MTC Co are associated (or correlated) with JuneYao Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JuneYao Dairy has no effect on the direction of Shenzhen MTC i.e., Shenzhen MTC and JuneYao Dairy go up and down completely randomly.

Pair Corralation between Shenzhen MTC and JuneYao Dairy

Assuming the 90 days trading horizon Shenzhen MTC Co is expected to generate 0.94 times more return on investment than JuneYao Dairy. However, Shenzhen MTC Co is 1.07 times less risky than JuneYao Dairy. It trades about 0.03 of its potential returns per unit of risk. JuneYao Dairy Co is currently generating about -0.08 per unit of risk. If you would invest  516.00  in Shenzhen MTC Co on December 2, 2024 and sell it today you would earn a total of  12.00  from holding Shenzhen MTC Co or generate 2.33% return on investment over 90 days.

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

Shenzhen MTC Co  vs.  JuneYao Dairy Co

Shenzhen MTC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen MTC Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen MTC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JuneYao Dairy

Risk-Adjusted Performance

Very Weak

Over the last 90 days JuneYao Dairy 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenzhen MTC and JuneYao Dairy

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

The idea behind Shenzhen MTC Co and JuneYao Dairy 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.