Correlation Between Maccura Biotechnology and Huaxia Eye

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

By analyzing existing cross correlation between Maccura Biotechnology Co and Huaxia Eye Hospital, you can compare the effects of market volatilities on Maccura Biotechnology and Huaxia Eye 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 Maccura Biotechnology with a short position of Huaxia Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maccura Biotechnology and Huaxia Eye.

Diversification Opportunities for Maccura Biotechnology and Huaxia Eye

0.98

Correlation Coefficient

Maccura Biotechnology  Huaxia Eye

Almost no diversification

The 3 months correlation between Maccura and Huaxia is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Maccura Biotechnology Co and Huaxia Eye Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaxia Eye Hospital and Maccura Biotechnology 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 Maccura Biotechnology Co are associated (or correlated) with Huaxia Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaxia Eye Hospital has no effect on the direction of Maccura Biotechnology i.e., Maccura Biotechnology and Huaxia Eye go up and down completely randomly.

Pair Corralation between Maccura Biotechnology and Huaxia Eye

Assuming the 90 days trading horizon Maccura Biotechnology Co is expected to generate 0.78 times more return on investment than Huaxia Eye. However, Maccura Biotechnology Co is 1.29 times less risky than Huaxia Eye. It trades about -0.11 of its potential returns per unit of risk. Huaxia Eye Hospital is currently generating about -0.15 per unit of risk. If you would invest  1,420  in Maccura Biotechnology Co on October 25, 2024 and sell it today you would lose (166.00) from holding Maccura Biotechnology Co or give up 11.69% of portfolio value over 90 days.

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

Maccura Biotechnology Co  vs.  Huaxia Eye Hospital

Maccura Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maccura Biotechnology Co 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.

Huaxia Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaxia Eye Hospital 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 Maccura Biotechnology and Huaxia Eye

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

The idea behind Maccura Biotechnology Co and Huaxia Eye Hospital 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.