Correlation Between Medprin Regenerative and Jiangxi Hengda

Can any of the company-specific risk be diversified away by investing in both Medprin Regenerative and Jiangxi Hengda 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 Medprin Regenerative and Jiangxi Hengda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Medprin Regenerative Medical and Jiangxi Hengda Hi Tech, you can compare the effects of market volatilities on Medprin Regenerative and Jiangxi Hengda 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 Medprin Regenerative with a short position of Jiangxi Hengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medprin Regenerative and Jiangxi Hengda.

Diversification Opportunities for Medprin Regenerative and Jiangxi Hengda

0.35

Correlation Coefficient

Medprin Regenerative  Jiangxi Hengda

Weak diversification

The 3 months correlation between Medprin and Jiangxi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Medprin Regenerative Medical and Jiangxi Hengda Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Hengda Hi and Medprin Regenerative 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 Medprin Regenerative Medical are associated (or correlated) with Jiangxi Hengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Hengda Hi has no effect on the direction of Medprin Regenerative i.e., Medprin Regenerative and Jiangxi Hengda go up and down completely randomly.

Pair Corralation between Medprin Regenerative and Jiangxi Hengda

Assuming the 90 days trading horizon Medprin Regenerative Medical is expected to generate 0.65 times more return on investment than Jiangxi Hengda. However, Medprin Regenerative Medical is 1.55 times less risky than Jiangxi Hengda. It trades about -0.01 of its potential returns per unit of risk. Jiangxi Hengda Hi Tech is currently generating about -0.02 per unit of risk. If you would invest  4,722  in Medprin Regenerative Medical on October 26, 2024 and sell it today you would lose (151.00) from holding Medprin Regenerative Medical or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Medprin Regenerative Medical  vs.  Jiangxi Hengda Hi Tech

Medprin Regenerative

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jiangxi Hengda Hi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Medprin Regenerative and Jiangxi Hengda

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

The idea behind Medprin Regenerative Medical and Jiangxi Hengda Hi Tech 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.