Correlation Between Victory New and Ma Kuang

Can any of the company-specific risk be diversified away by investing in both Victory New and Ma Kuang 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 Victory New and Ma Kuang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victory New Materials and Ma Kuang Healthcare, you can compare the effects of market volatilities on Victory New and Ma Kuang 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 Victory New with a short position of Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Ma Kuang.

Diversification Opportunities for Victory New and Ma Kuang

0.41

Correlation Coefficient

Victory New  Ma Kuang

Very weak diversification

The 3 months correlation between Victory and 4139 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare and Victory New 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 Victory New Materials are associated (or correlated) with Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of Victory New i.e., Victory New and Ma Kuang go up and down completely randomly.

Pair Corralation between Victory New and Ma Kuang

Assuming the 90 days trading horizon Victory New Materials is expected to under-perform the Ma Kuang. But the stock apears to be less risky and, when comparing its historical volatility, Victory New Materials is 2.04 times less risky than Ma Kuang. The stock trades about -0.49 of its potential returns per unit of risk. The Ma Kuang Healthcare is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,985  in Ma Kuang Healthcare on October 4, 2024 and sell it today you would earn a total of  245.00  from holding Ma Kuang Healthcare or generate 8.21% return on investment over 90 days.

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

Victory New Materials  vs.  Ma Kuang Healthcare

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ma Kuang Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ma Kuang Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Victory New and Ma Kuang

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

The idea behind Victory New Materials and Ma Kuang Healthcare 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.