Correlation Between Ma Kuang and WPG Holdings

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

Diversification Opportunities for Ma Kuang and WPG Holdings

0.04

Correlation Coefficient

Ma Kuang  WPG Holdings

Significant diversification

The 3 months correlation between 4139 and WPG is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings 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 WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Ma Kuang i.e., Ma Kuang and WPG Holdings go up and down completely randomly.

Pair Corralation between Ma Kuang and WPG Holdings

If you would invest  5,170  in WPG Holdings on December 21, 2024 and sell it today you would earn a total of  0.00  from holding WPG Holdings or generate 0.0% return on investment over 90 days.

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

Ma Kuang Healthcare  vs.  WPG Holdings

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 fairly stable basic indicators, Ma Kuang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WPG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days WPG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WPG Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ma Kuang and WPG Holdings

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

The idea behind Ma Kuang Healthcare and WPG Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.