Correlation Between 159681 and Shenzhen Mindray

Can any of the company-specific risk be diversified away by investing in both 159681 and Shenzhen Mindray 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 159681 and Shenzhen Mindray into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 159681 and Shenzhen Mindray Bio Medical, you can compare the effects of market volatilities on 159681 and Shenzhen Mindray 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 159681 with a short position of Shenzhen Mindray. Check out your portfolio center. Please also check ongoing floating volatility patterns of 159681 and Shenzhen Mindray.

Diversification Opportunities for 159681 and Shenzhen Mindray

0.63

Correlation Coefficient

159681  Shenzhen Mindray

Poor diversification

The 3 months correlation between 159681 and Shenzhen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding 159681 and Shenzhen Mindray Bio Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Mindray Bio and 159681 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 159681 are associated (or correlated) with Shenzhen Mindray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Mindray Bio has no effect on the direction of 159681 i.e., 159681 and Shenzhen Mindray go up and down completely randomly.

Pair Corralation between 159681 and Shenzhen Mindray

Assuming the 90 days trading horizon 159681 is expected to under-perform the Shenzhen Mindray. But the etf apears to be less risky and, when comparing its historical volatility, 159681 is 1.1 times less risky than Shenzhen Mindray. The etf trades about -0.43 of its potential returns per unit of risk. The Shenzhen Mindray Bio Medical is currently generating about -0.31 of returns per unit of risk over similar time horizon. If you would invest  26,230  in Shenzhen Mindray Bio Medical on October 12, 2024 and sell it today you would lose (2,602) from holding Shenzhen Mindray Bio Medical or give up 9.92% of portfolio value over 90 days.

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

159681  vs.  Shenzhen Mindray Bio Medical

159681

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 159681 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Shenzhen Mindray Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Mindray Bio Medical 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with 159681 and Shenzhen Mindray

The main advantage of trading using opposite 159681 and Shenzhen Mindray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 159681 position performs unexpectedly, Shenzhen Mindray 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 Shenzhen Mindray will offset losses from the drop in Shenzhen Mindray's long position.

The idea behind 159681 and Shenzhen Mindray Bio Medical 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.