Correlation Between Mingchen Health and Kingsignal Technology

Can any of the company-specific risk be diversified away by investing in both Mingchen Health and Kingsignal Technology 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 Kingsignal Technology 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 Kingsignal Technology Co, you can compare the effects of market volatilities on Mingchen Health and Kingsignal Technology 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 Kingsignal Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mingchen Health and Kingsignal Technology.

Diversification Opportunities for Mingchen Health and Kingsignal Technology

0.9

Correlation Coefficient

Mingchen Health  Kingsignal Technology

Almost no diversification

The 3 months correlation between Mingchen and Kingsignal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mingchen Health Co and Kingsignal Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsignal Technology 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 Kingsignal Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsignal Technology has no effect on the direction of Mingchen Health i.e., Mingchen Health and Kingsignal Technology go up and down completely randomly.

Pair Corralation between Mingchen Health and Kingsignal Technology

Assuming the 90 days trading horizon Mingchen Health is expected to generate 1.42 times less return on investment than Kingsignal Technology. But when comparing it to its historical volatility, Mingchen Health Co is 1.43 times less risky than Kingsignal Technology. It trades about 0.17 of its potential returns per unit of risk. Kingsignal Technology Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  669.00  in Kingsignal Technology Co on September 12, 2024 and sell it today you would earn a total of  321.00  from holding Kingsignal Technology Co or generate 47.98% return on investment over 90 days.

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

Mingchen Health Co  vs.  Kingsignal Technology Co

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.

Kingsignal Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsignal Technology Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingsignal Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mingchen Health and Kingsignal Technology

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

The idea behind Mingchen Health Co and Kingsignal Technology 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.