Correlation Between Shantou Wanshun and Miracll Chemicals

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

By analyzing existing cross correlation between Shantou Wanshun Package and Miracll Chemicals Co, you can compare the effects of market volatilities on Shantou Wanshun and Miracll Chemicals 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 Shantou Wanshun with a short position of Miracll Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shantou Wanshun and Miracll Chemicals.

Diversification Opportunities for Shantou Wanshun and Miracll Chemicals

0.64

Correlation Coefficient

Shantou Wanshun  Miracll Chemicals

Poor diversification

The 3 months correlation between Shantou and Miracll is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shantou Wanshun Package and Miracll Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miracll Chemicals and Shantou Wanshun 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 Shantou Wanshun Package are associated (or correlated) with Miracll Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miracll Chemicals has no effect on the direction of Shantou Wanshun i.e., Shantou Wanshun and Miracll Chemicals go up and down completely randomly.

Pair Corralation between Shantou Wanshun and Miracll Chemicals

Assuming the 90 days trading horizon Shantou Wanshun Package is expected to under-perform the Miracll Chemicals. In addition to that, Shantou Wanshun is 1.3 times more volatile than Miracll Chemicals Co. It trades about -0.56 of its total potential returns per unit of risk. Miracll Chemicals Co is currently generating about -0.65 per unit of volatility. If you would invest  1,938  in Miracll Chemicals Co on October 13, 2024 and sell it today you would lose (435.00) from holding Miracll Chemicals Co or give up 22.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Shantou Wanshun Package  vs.  Miracll Chemicals Co

Shantou Wanshun Package

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shantou Wanshun Package 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.

Miracll Chemicals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Miracll Chemicals Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Miracll Chemicals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shantou Wanshun and Miracll Chemicals

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

The idea behind Shantou Wanshun Package and Miracll Chemicals Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.