Correlation Between Maxvision Technology and Guangzhou Shangpin

Can any of the company-specific risk be diversified away by investing in both Maxvision Technology and Guangzhou Shangpin 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 Maxvision Technology and Guangzhou Shangpin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maxvision Technology Corp and Guangzhou Shangpin Home, you can compare the effects of market volatilities on Maxvision Technology and Guangzhou Shangpin 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 Maxvision Technology with a short position of Guangzhou Shangpin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxvision Technology and Guangzhou Shangpin.

Diversification Opportunities for Maxvision Technology and Guangzhou Shangpin

0.5

Correlation Coefficient

Maxvision Technology  Guangzhou Shangpin

Very weak diversification

The 3 months correlation between Maxvision and Guangzhou is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Maxvision Technology Corp and Guangzhou Shangpin Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Shangpin Home and Maxvision Technology 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 Maxvision Technology Corp are associated (or correlated) with Guangzhou Shangpin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Shangpin Home has no effect on the direction of Maxvision Technology i.e., Maxvision Technology and Guangzhou Shangpin go up and down completely randomly.

Pair Corralation between Maxvision Technology and Guangzhou Shangpin

Assuming the 90 days trading horizon Maxvision Technology Corp is expected to generate 1.36 times more return on investment than Guangzhou Shangpin. However, Maxvision Technology is 1.36 times more volatile than Guangzhou Shangpin Home. It trades about 0.09 of its potential returns per unit of risk. Guangzhou Shangpin Home is currently generating about -0.09 per unit of risk. If you would invest  2,449  in Maxvision Technology Corp on December 2, 2024 and sell it today you would earn a total of  404.00  from holding Maxvision Technology Corp or generate 16.5% return on investment over 90 days.

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

Maxvision Technology Corp  vs.  Guangzhou Shangpin Home

Maxvision Technology Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maxvision Technology Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maxvision Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Shangpin Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Shangpin Home has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Maxvision Technology and Guangzhou Shangpin

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

The idea behind Maxvision Technology Corp and Guangzhou Shangpin Home 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.