Correlation Between Mingchen Health and De Rucci

Can any of the company-specific risk be diversified away by investing in both Mingchen Health and De Rucci 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 Mingchen Health and De Rucci into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mingchen Health Co and De Rucci Healthy, you can compare the effects of market volatilities on Mingchen Health and De Rucci 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 Mingchen Health with a short position of De Rucci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mingchen Health and De Rucci.

Diversification Opportunities for Mingchen Health and De Rucci

0.89

Correlation Coefficient

Mingchen Health  De Rucci

Very poor diversification

The 3 months correlation between Mingchen and 001323 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mingchen Health Co and De Rucci Healthy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Rucci Healthy and Mingchen Health 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 Mingchen Health Co are associated (or correlated) with De Rucci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Rucci Healthy has no effect on the direction of Mingchen Health i.e., Mingchen Health and De Rucci go up and down completely randomly.

Pair Corralation between Mingchen Health and De Rucci

Assuming the 90 days trading horizon Mingchen Health is expected to generate 1.08 times less return on investment than De Rucci. In addition to that, Mingchen Health is 1.21 times more volatile than De Rucci Healthy. It trades about 0.18 of its total potential returns per unit of risk. De Rucci Healthy is currently generating about 0.23 per unit of volatility. If you would invest  2,764  in De Rucci Healthy on September 14, 2024 and sell it today you would earn a total of  1,140  from holding De Rucci Healthy or generate 41.24% return on investment over 90 days.

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

Mingchen Health Co  vs.  De Rucci Healthy

Mingchen Health

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mingchen Health Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mingchen Health sustained solid returns over the last few months and may actually be approaching a breakup point.

De Rucci Healthy

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in De Rucci Healthy are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, De Rucci sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mingchen Health and De Rucci

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

The idea behind Mingchen Health Co and De Rucci Healthy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.