Correlation Between Shenzhen Mindray and Anhui Gujing

Can any of the company-specific risk be diversified away by investing in both Shenzhen Mindray and Anhui Gujing 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 Anhui Gujing 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 Anhui Gujing Distillery, you can compare the effects of market volatilities on Shenzhen Mindray and Anhui Gujing 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 Anhui Gujing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Mindray and Anhui Gujing.

Diversification Opportunities for Shenzhen Mindray and Anhui Gujing

0.34

Correlation Coefficient

Shenzhen Mindray  Anhui Gujing

Weak diversification

The 3 months correlation between Shenzhen and Anhui is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Mindray Bio Medical and Anhui Gujing Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Gujing Distillery 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 Anhui Gujing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Gujing Distillery has no effect on the direction of Shenzhen Mindray i.e., Shenzhen Mindray and Anhui Gujing go up and down completely randomly.

Pair Corralation between Shenzhen Mindray and Anhui Gujing

Assuming the 90 days trading horizon Shenzhen Mindray Bio Medical is expected to under-perform the Anhui Gujing. In addition to that, Shenzhen Mindray is 1.38 times more volatile than Anhui Gujing Distillery. It trades about -0.03 of its total potential returns per unit of risk. Anhui Gujing Distillery is currently generating about 0.11 per unit of volatility. If you would invest  10,795  in Anhui Gujing Distillery on December 2, 2024 and sell it today you would earn a total of  808.00  from holding Anhui Gujing Distillery or generate 7.48% return on investment 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.  Anhui Gujing Distillery

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.

Anhui Gujing Distillery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Gujing Distillery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Gujing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shenzhen Mindray and Anhui Gujing

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

The idea behind Shenzhen Mindray Bio Medical and Anhui Gujing Distillery 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.