Correlation Between Jia Jie and MPI

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

By analyzing existing cross correlation between Jia Jie Biomedical and MPI Corporation, you can compare the effects of market volatilities on Jia Jie and MPI 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 Jia Jie with a short position of MPI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jia Jie and MPI.

Diversification Opportunities for Jia Jie and MPI

-0.56

Correlation Coefficient

Jia Jie  MPI

Excellent diversification

The 3 months correlation between Jia and MPI is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Jia Jie Biomedical and MPI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPI Corporation and Jia Jie 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 Jia Jie Biomedical are associated (or correlated) with MPI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPI Corporation has no effect on the direction of Jia Jie i.e., Jia Jie and MPI go up and down completely randomly.

Pair Corralation between Jia Jie and MPI

Assuming the 90 days trading horizon Jia Jie is expected to generate 3.93 times less return on investment than MPI. But when comparing it to its historical volatility, Jia Jie Biomedical is 1.31 times less risky than MPI. It trades about 0.05 of its potential returns per unit of risk. MPI Corporation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,807  in MPI Corporation on October 4, 2024 and sell it today you would earn a total of  81,793  from holding MPI Corporation or generate 756.85% return on investment over 90 days.

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

Jia Jie Biomedical  vs.  MPI Corp.

Jia Jie Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jia Jie Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

MPI Corporation

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MPI Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MPI showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jia Jie and MPI

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

The idea behind Jia Jie Biomedical and MPI Corporation 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.