Correlation Between Mingchen Health and Advanced Micro

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

Diversification Opportunities for Mingchen Health and Advanced Micro

0.92

Correlation Coefficient

Mingchen Health  Advanced Micro

Almost no diversification

The 3 months correlation between Mingchen and Advanced is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mingchen Health Co and Advanced Micro Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Fabri 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Fabri has no effect on the direction of Mingchen Health i.e., Mingchen Health and Advanced Micro go up and down completely randomly.

Pair Corralation between Mingchen Health and Advanced Micro

Assuming the 90 days trading horizon Mingchen Health Co is expected to under-perform the Advanced Micro. In addition to that, Mingchen Health is 1.05 times more volatile than Advanced Micro Fabrication. It trades about -0.04 of its total potential returns per unit of risk. Advanced Micro Fabrication is currently generating about 0.06 per unit of volatility. If you would invest  13,340  in Advanced Micro Fabrication on September 13, 2024 and sell it today you would earn a total of  7,240  from holding Advanced Micro Fabrication or generate 54.27% 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.  Advanced Micro Fabrication

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.

Advanced Micro Fabri

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Fabrication are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Advanced Micro sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mingchen Health and Advanced Micro

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

The idea behind Mingchen Health Co and Advanced Micro Fabrication 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.