Correlation Between DO Home and Ming Yang

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

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

Diversification Opportunities for DO Home and Ming Yang

0.93

Correlation Coefficient

DO Home  Ming Yang

Almost no diversification

The 3 months correlation between 002798 and Ming is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding DO Home Collection 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 DO Home 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 DO Home Collection 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 DO Home i.e., DO Home and Ming Yang go up and down completely randomly.

Pair Corralation between DO Home and Ming Yang

Assuming the 90 days trading horizon DO Home Collection is expected to under-perform the Ming Yang. In addition to that, DO Home is 1.68 times more volatile than Ming Yang Smart. It trades about -0.15 of its total potential returns per unit of risk. Ming Yang Smart is currently generating about -0.14 per unit of volatility. If you would invest  1,377  in Ming Yang Smart on September 28, 2024 and sell it today you would lose (90.00) from holding Ming Yang Smart or give up 6.54% of portfolio value over 90 days.

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

DO Home Collection  vs.  Ming Yang Smart

DO Home Collection

Risk-Adjusted Performance

2 of 100

Weak

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

Ming Yang Smart

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Yang Smart are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ming Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DO Home and Ming Yang

The main advantage of trading using opposite DO Home and Ming Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DO Home 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 DO Home Collection 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.