Correlation Between Muyuan Foodstuff and Shanghai Rightongene

Can any of the company-specific risk be diversified away by investing in both Muyuan Foodstuff and Shanghai Rightongene 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 Muyuan Foodstuff and Shanghai Rightongene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Muyuan Foodstuff Co and Shanghai Rightongene Biotechnology, you can compare the effects of market volatilities on Muyuan Foodstuff and Shanghai Rightongene 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 Muyuan Foodstuff with a short position of Shanghai Rightongene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muyuan Foodstuff and Shanghai Rightongene.

Diversification Opportunities for Muyuan Foodstuff and Shanghai Rightongene

0.21

Correlation Coefficient

Muyuan Foodstuff  Shanghai Rightongene

Modest diversification

The 3 months correlation between Muyuan and Shanghai is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Muyuan Foodstuff Co and Shanghai Rightongene Biotechno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rightongene and Muyuan Foodstuff 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 Muyuan Foodstuff Co are associated (or correlated) with Shanghai Rightongene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rightongene has no effect on the direction of Muyuan Foodstuff i.e., Muyuan Foodstuff and Shanghai Rightongene go up and down completely randomly.

Pair Corralation between Muyuan Foodstuff and Shanghai Rightongene

Assuming the 90 days trading horizon Muyuan Foodstuff is expected to generate 1.99 times less return on investment than Shanghai Rightongene. But when comparing it to its historical volatility, Muyuan Foodstuff Co is 1.77 times less risky than Shanghai Rightongene. It trades about 0.07 of its potential returns per unit of risk. Shanghai Rightongene Biotechnology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,937  in Shanghai Rightongene Biotechnology on December 26, 2024 and sell it today you would earn a total of  178.00  from holding Shanghai Rightongene Biotechnology or generate 9.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Muyuan Foodstuff Co  vs.  Shanghai Rightongene Biotechno

Muyuan Foodstuff

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Muyuan Foodstuff Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Muyuan Foodstuff is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shanghai Rightongene

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Rightongene Biotechnology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Rightongene may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Muyuan Foodstuff and Shanghai Rightongene

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

The idea behind Muyuan Foodstuff Co and Shanghai Rightongene Biotechnology 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.