Correlation Between Yunnan Chuangxin and Xiangyu Medical

Can any of the company-specific risk be diversified away by investing in both Yunnan Chuangxin and Xiangyu Medical 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 Yunnan Chuangxin and Xiangyu Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yunnan Chuangxin New and Xiangyu Medical Co, you can compare the effects of market volatilities on Yunnan Chuangxin and Xiangyu Medical 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 Yunnan Chuangxin with a short position of Xiangyu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunnan Chuangxin and Xiangyu Medical.

Diversification Opportunities for Yunnan Chuangxin and Xiangyu Medical

0.47

Correlation Coefficient

Yunnan Chuangxin  Xiangyu Medical

Very weak diversification

The 3 months correlation between Yunnan and Xiangyu is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Chuangxin New and Xiangyu Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangyu Medical and Yunnan Chuangxin 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 Yunnan Chuangxin New are associated (or correlated) with Xiangyu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangyu Medical has no effect on the direction of Yunnan Chuangxin i.e., Yunnan Chuangxin and Xiangyu Medical go up and down completely randomly.

Pair Corralation between Yunnan Chuangxin and Xiangyu Medical

Assuming the 90 days trading horizon Yunnan Chuangxin New is expected to under-perform the Xiangyu Medical. But the stock apears to be less risky and, when comparing its historical volatility, Yunnan Chuangxin New is 1.31 times less risky than Xiangyu Medical. The stock trades about -0.1 of its potential returns per unit of risk. The Xiangyu Medical Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,299  in Xiangyu Medical Co on October 6, 2024 and sell it today you would lose (488.00) from holding Xiangyu Medical Co or give up 14.79% of portfolio value over 90 days.

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

Yunnan Chuangxin New  vs.  Xiangyu Medical Co

Yunnan Chuangxin New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yunnan Chuangxin New 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xiangyu Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiangyu Medical Co 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 Yunnan Chuangxin and Xiangyu Medical

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

The idea behind Yunnan Chuangxin New and Xiangyu Medical 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.

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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.