Correlation Between Mingchen Health and Ningbo Jianan

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

Diversification Opportunities for Mingchen Health and Ningbo Jianan

0.54

Correlation Coefficient

Mingchen Health  Ningbo Jianan

Very weak diversification

The 3 months correlation between Mingchen and Ningbo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mingchen Health Co and Ningbo Jianan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Jianan Electronics 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 Ningbo Jianan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Jianan Electronics has no effect on the direction of Mingchen Health i.e., Mingchen Health and Ningbo Jianan go up and down completely randomly.

Pair Corralation between Mingchen Health and Ningbo Jianan

Assuming the 90 days trading horizon Mingchen Health Co is expected to under-perform the Ningbo Jianan. But the stock apears to be less risky and, when comparing its historical volatility, Mingchen Health Co is 1.05 times less risky than Ningbo Jianan. The stock trades about -0.03 of its potential returns per unit of risk. The Ningbo Jianan Electronics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,152  in Ningbo Jianan Electronics on October 4, 2024 and sell it today you would earn a total of  68.00  from holding Ningbo Jianan Electronics or generate 3.16% return on investment over 90 days.

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

Mingchen Health Co  vs.  Ningbo Jianan Electronics

Mingchen Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mingchen Health Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mingchen Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ningbo Jianan Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Jianan Electronics 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 Mingchen Health and Ningbo Jianan

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

The idea behind Mingchen Health Co and Ningbo Jianan Electronics 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.