Correlation Between Masterwork Machinery and Chison Medical

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

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

Diversification Opportunities for Masterwork Machinery and Chison Medical

0.86

Correlation Coefficient

Masterwork Machinery  Chison Medical

Very poor diversification

The 3 months correlation between Masterwork and Chison is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Masterwork Machinery and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn and Masterwork Machinery 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 Masterwork Machinery are associated (or correlated) with Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Masterwork Machinery i.e., Masterwork Machinery and Chison Medical go up and down completely randomly.

Pair Corralation between Masterwork Machinery and Chison Medical

Assuming the 90 days trading horizon Masterwork Machinery is expected to generate 1.2 times more return on investment than Chison Medical. However, Masterwork Machinery is 1.2 times more volatile than Chison Medical Technologies. It trades about -0.09 of its potential returns per unit of risk. Chison Medical Technologies is currently generating about -0.11 per unit of risk. If you would invest  609.00  in Masterwork Machinery on September 27, 2024 and sell it today you would lose (34.00) from holding Masterwork Machinery or give up 5.58% of portfolio value over 90 days.

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

Masterwork Machinery  vs.  Chison Medical Technologies

Masterwork Machinery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Masterwork Machinery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Masterwork Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Chison Medical Techn

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chison Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Masterwork Machinery and Chison Medical

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

The idea behind Masterwork Machinery and Chison Medical Technologies 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.