Correlation Between Shenzhen Mindray and Guangzhou Jinyi

Can any of the company-specific risk be diversified away by investing in both Shenzhen Mindray and Guangzhou Jinyi 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 Shenzhen Mindray and Guangzhou Jinyi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Mindray Bio Medical and Guangzhou Jinyi Media, you can compare the effects of market volatilities on Shenzhen Mindray and Guangzhou Jinyi 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 Shenzhen Mindray with a short position of Guangzhou Jinyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Mindray and Guangzhou Jinyi.

Diversification Opportunities for Shenzhen Mindray and Guangzhou Jinyi

0.39

Correlation Coefficient

Shenzhen Mindray  Guangzhou Jinyi

Weak diversification

The 3 months correlation between Shenzhen and Guangzhou is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Mindray Bio Medical and Guangzhou Jinyi Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jinyi Media and Shenzhen Mindray 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 Shenzhen Mindray Bio Medical are associated (or correlated) with Guangzhou Jinyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jinyi Media has no effect on the direction of Shenzhen Mindray i.e., Shenzhen Mindray and Guangzhou Jinyi go up and down completely randomly.

Pair Corralation between Shenzhen Mindray and Guangzhou Jinyi

Assuming the 90 days trading horizon Shenzhen Mindray Bio Medical is expected to generate 0.41 times more return on investment than Guangzhou Jinyi. However, Shenzhen Mindray Bio Medical is 2.46 times less risky than Guangzhou Jinyi. It trades about -0.03 of its potential returns per unit of risk. Guangzhou Jinyi Media is currently generating about -0.06 per unit of risk. If you would invest  26,071  in Shenzhen Mindray Bio Medical on December 3, 2024 and sell it today you would lose (780.00) from holding Shenzhen Mindray Bio Medical or give up 2.99% of portfolio value over 90 days.

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

Shenzhen Mindray Bio Medical  vs.  Guangzhou Jinyi Media

Shenzhen Mindray Bio

Risk-Adjusted Performance

Very Weak

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

Guangzhou Jinyi Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Jinyi Media 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenzhen Mindray and Guangzhou Jinyi

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

The idea behind Shenzhen Mindray Bio Medical and Guangzhou Jinyi Media 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .