Correlation Between Mingchen Health and Yuanjie Semiconductor

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

Diversification Opportunities for Mingchen Health and Yuanjie Semiconductor

-0.17

Correlation Coefficient

Mingchen Health  Yuanjie Semiconductor

Good diversification

The 3 months correlation between Mingchen and Yuanjie is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Mingchen Health Co and Yuanjie Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanjie Semiconductor 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 Yuanjie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanjie Semiconductor has no effect on the direction of Mingchen Health i.e., Mingchen Health and Yuanjie Semiconductor go up and down completely randomly.

Pair Corralation between Mingchen Health and Yuanjie Semiconductor

Assuming the 90 days trading horizon Mingchen Health is expected to generate 20.91 times less return on investment than Yuanjie Semiconductor. But when comparing it to its historical volatility, Mingchen Health Co is 1.47 times less risky than Yuanjie Semiconductor. It trades about 0.0 of its potential returns per unit of risk. Yuanjie Semiconductor Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,686  in Yuanjie Semiconductor Technology on October 10, 2024 and sell it today you would earn a total of  3,791  from holding Yuanjie Semiconductor Technology or generate 39.14% return on investment over 90 days.

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

Mingchen Health Co  vs.  Yuanjie Semiconductor Technolo

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.

Yuanjie Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuanjie Semiconductor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yuanjie Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mingchen Health and Yuanjie Semiconductor

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

The idea behind Mingchen Health Co and Yuanjie Semiconductor Technology 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.