Correlation Between Ma Kuang and Chi Hua

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

By analyzing existing cross correlation between Ma Kuang Healthcare and Chi Hua Fitness, you can compare the effects of market volatilities on Ma Kuang and Chi Hua 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 Ma Kuang with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ma Kuang and Chi Hua.

Diversification Opportunities for Ma Kuang and Chi Hua

-0.58

Correlation Coefficient

Ma Kuang  Chi Hua

Excellent diversification

The 3 months correlation between 4139 and Chi is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Ma Kuang 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 Ma Kuang Healthcare are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Ma Kuang i.e., Ma Kuang and Chi Hua go up and down completely randomly.

Pair Corralation between Ma Kuang and Chi Hua

Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to under-perform the Chi Hua. In addition to that, Ma Kuang is 1.28 times more volatile than Chi Hua Fitness. It trades about -0.23 of its total potential returns per unit of risk. Chi Hua Fitness is currently generating about 0.05 per unit of volatility. If you would invest  3,665  in Chi Hua Fitness on December 28, 2024 and sell it today you would earn a total of  75.00  from holding Chi Hua Fitness or generate 2.05% return on investment over 90 days.

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

Ma Kuang Healthcare  vs.  Chi Hua Fitness

Ma Kuang Healthcare

Risk-Adjusted Performance

Very Weak

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

Chi Hua Fitness

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chi Hua Fitness are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chi Hua is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ma Kuang and Chi Hua

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

The idea behind Ma Kuang Healthcare and Chi Hua Fitness 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.