Correlation Between Guangdong Transtek and Meinian Onehealth

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

By analyzing existing cross correlation between Guangdong Transtek Medical and Meinian Onehealth Healthcare, you can compare the effects of market volatilities on Guangdong Transtek and Meinian Onehealth 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 Guangdong Transtek with a short position of Meinian Onehealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Transtek and Meinian Onehealth.

Diversification Opportunities for Guangdong Transtek and Meinian Onehealth

0.61

Correlation Coefficient

Guangdong Transtek  Meinian Onehealth

Poor diversification

The 3 months correlation between Guangdong and Meinian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Transtek Medical and Meinian Onehealth Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meinian Onehealth and Guangdong Transtek 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 Guangdong Transtek Medical are associated (or correlated) with Meinian Onehealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meinian Onehealth has no effect on the direction of Guangdong Transtek i.e., Guangdong Transtek and Meinian Onehealth go up and down completely randomly.

Pair Corralation between Guangdong Transtek and Meinian Onehealth

Assuming the 90 days trading horizon Guangdong Transtek is expected to generate 2.24 times less return on investment than Meinian Onehealth. In addition to that, Guangdong Transtek is 1.83 times more volatile than Meinian Onehealth Healthcare. It trades about 0.01 of its total potential returns per unit of risk. Meinian Onehealth Healthcare is currently generating about 0.05 per unit of volatility. If you would invest  400.00  in Meinian Onehealth Healthcare on October 12, 2024 and sell it today you would earn a total of  23.00  from holding Meinian Onehealth Healthcare or generate 5.75% return on investment over 90 days.

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

Guangdong Transtek Medical  vs.  Meinian Onehealth Healthcare

Guangdong Transtek

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Guangdong Transtek Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangdong Transtek is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Meinian Onehealth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Meinian Onehealth Healthcare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meinian Onehealth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guangdong Transtek and Meinian Onehealth

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

The idea behind Guangdong Transtek Medical and Meinian Onehealth 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.