Correlation Between YiDong Electronics and Malion New

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

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

Diversification Opportunities for YiDong Electronics and Malion New

0.22

Correlation Coefficient

YiDong Electronics  Malion New

Modest diversification

The 3 months correlation between YiDong and Malion is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding YiDong Electronics Technology and Malion New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malion New Materials and YiDong Electronics 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 YiDong Electronics Technology are associated (or correlated) with Malion New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malion New Materials has no effect on the direction of YiDong Electronics i.e., YiDong Electronics and Malion New go up and down completely randomly.

Pair Corralation between YiDong Electronics and Malion New

Assuming the 90 days trading horizon YiDong Electronics is expected to generate 1.04 times less return on investment than Malion New. In addition to that, YiDong Electronics is 1.91 times more volatile than Malion New Materials. It trades about 0.02 of its total potential returns per unit of risk. Malion New Materials is currently generating about 0.05 per unit of volatility. If you would invest  849.00  in Malion New Materials on December 30, 2024 and sell it today you would earn a total of  40.00  from holding Malion New Materials or generate 4.71% return on investment over 90 days.

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

YiDong Electronics Technology  vs.  Malion New Materials

YiDong Electronics

Risk-Adjusted Performance

Weak

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

Malion New Materials

Risk-Adjusted Performance

Insignificant

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

Pair Trading with YiDong Electronics and Malion New

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

The idea behind YiDong Electronics Technology and Malion New Materials 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.