Correlation Between Guangdong Qunxing and Ming Yang

Can any of the company-specific risk be diversified away by investing in both Guangdong Qunxing and Ming Yang 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 Guangdong Qunxing and Ming Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Qunxing Toys and Ming Yang Smart, you can compare the effects of market volatilities on Guangdong Qunxing and Ming Yang 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 Guangdong Qunxing with a short position of Ming Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Qunxing and Ming Yang.

Diversification Opportunities for Guangdong Qunxing and Ming Yang

0.23

Correlation Coefficient

Guangdong Qunxing  Ming Yang

Modest diversification

The 3 months correlation between Guangdong and Ming is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Qunxing Toys and Ming Yang Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Yang Smart and Guangdong Qunxing 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 Guangdong Qunxing Toys are associated (or correlated) with Ming Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Yang Smart has no effect on the direction of Guangdong Qunxing i.e., Guangdong Qunxing and Ming Yang go up and down completely randomly.

Pair Corralation between Guangdong Qunxing and Ming Yang

Assuming the 90 days trading horizon Guangdong Qunxing Toys is expected to generate 1.86 times more return on investment than Ming Yang. However, Guangdong Qunxing is 1.86 times more volatile than Ming Yang Smart. It trades about -0.05 of its potential returns per unit of risk. Ming Yang Smart is currently generating about -0.37 per unit of risk. If you would invest  724.00  in Guangdong Qunxing Toys on October 27, 2024 and sell it today you would lose (46.00) from holding Guangdong Qunxing Toys or give up 6.35% of portfolio value over 90 days.

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

Guangdong Qunxing Toys  vs.  Ming Yang Smart

Guangdong Qunxing Toys

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Qunxing Toys are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Qunxing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ming Yang Smart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ming Yang Smart 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 Guangdong Qunxing and Ming Yang

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

The idea behind Guangdong Qunxing Toys and Ming Yang Smart 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.