Correlation Between Haitai Confectionery and MEDIANA CoLtd

Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery and MEDIANA CoLtd 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 Haitai Confectionery and MEDIANA CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haitai Confectionery Foods and MEDIANA CoLtd, you can compare the effects of market volatilities on Haitai Confectionery and MEDIANA CoLtd 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 Haitai Confectionery with a short position of MEDIANA CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and MEDIANA CoLtd.

Diversification Opportunities for Haitai Confectionery and MEDIANA CoLtd

0.25

Correlation Coefficient

Haitai Confectionery  MEDIANA CoLtd

Modest diversification

The 3 months correlation between Haitai and MEDIANA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and MEDIANA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIANA CoLtd and Haitai Confectionery 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 Haitai Confectionery Foods are associated (or correlated) with MEDIANA CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIANA CoLtd has no effect on the direction of Haitai Confectionery i.e., Haitai Confectionery and MEDIANA CoLtd go up and down completely randomly.

Pair Corralation between Haitai Confectionery and MEDIANA CoLtd

Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to generate 0.75 times more return on investment than MEDIANA CoLtd. However, Haitai Confectionery Foods is 1.34 times less risky than MEDIANA CoLtd. It trades about 0.15 of its potential returns per unit of risk. MEDIANA CoLtd is currently generating about -0.11 per unit of risk. If you would invest  552,930  in Haitai Confectionery Foods on September 30, 2024 and sell it today you would earn a total of  41,070  from holding Haitai Confectionery Foods or generate 7.43% return on investment over 90 days.

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

Haitai Confectionery Foods  vs.  MEDIANA CoLtd

Haitai Confectionery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haitai Confectionery Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haitai Confectionery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MEDIANA CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDIANA CoLtd 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 Haitai Confectionery and MEDIANA CoLtd

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

The idea behind Haitai Confectionery Foods and MEDIANA CoLtd 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.