Correlation Between Ma Kuang and Yeou Yih

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

Diversification Opportunities for Ma Kuang and Yeou Yih

-0.58

Correlation Coefficient

Ma Kuang  Yeou Yih

Excellent diversification

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

Pair Corralation between Ma Kuang and Yeou Yih

Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to under-perform the Yeou Yih. But the stock apears to be less risky and, when comparing its historical volatility, Ma Kuang Healthcare is 1.27 times less risky than Yeou Yih. The stock trades about -0.07 of its potential returns per unit of risk. The Yeou Yih Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,515  in Yeou Yih Steel on December 20, 2024 and sell it today you would earn a total of  70.00  from holding Yeou Yih Steel or generate 4.62% 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.  Yeou Yih Steel

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Yeou Yih Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yeou Yih Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yeou Yih is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ma Kuang and Yeou Yih

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

The idea behind Ma Kuang Healthcare and Yeou Yih Steel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.