Correlation Between Malion New and China National

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

By analyzing existing cross correlation between Malion New Materials and China National Software, you can compare the effects of market volatilities on Malion New and China National 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 Malion New with a short position of China National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malion New and China National.

Diversification Opportunities for Malion New and China National

0.64

Correlation Coefficient

Malion New  China National

Poor diversification

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

Pair Corralation between Malion New and China National

Assuming the 90 days trading horizon Malion New Materials is expected to under-perform the China National. In addition to that, Malion New is 1.14 times more volatile than China National Software. It trades about 0.0 of its total potential returns per unit of risk. China National Software is currently generating about 0.03 per unit of volatility. If you would invest  4,610  in China National Software on October 3, 2024 and sell it today you would earn a total of  59.00  from holding China National Software or generate 1.28% return on investment over 90 days.

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

Malion New Materials  vs.  China National Software

Malion New Materials

Risk-Adjusted Performance

0 of 100

Weak

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

China National Software

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China National Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Malion New and China National

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

The idea behind Malion New Materials and China National Software 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.

Check out your portfolio center.

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.