Correlation Between Yuan High and Microtips Technology

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

By analyzing existing cross correlation between Yuan High Tech Development and Microtips Technology, you can compare the effects of market volatilities on Yuan High and Microtips Technology 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 Yuan High with a short position of Microtips Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuan High and Microtips Technology.

Diversification Opportunities for Yuan High and Microtips Technology

-0.01

Correlation Coefficient

Yuan High  Microtips Technology

Good diversification

The 3 months correlation between Yuan and Microtips is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Yuan High Tech Development and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology and Yuan High 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 Yuan High Tech Development are associated (or correlated) with Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of Yuan High i.e., Yuan High and Microtips Technology go up and down completely randomly.

Pair Corralation between Yuan High and Microtips Technology

Assuming the 90 days trading horizon Yuan High Tech Development is expected to under-perform the Microtips Technology. In addition to that, Yuan High is 3.65 times more volatile than Microtips Technology. It trades about -0.08 of its total potential returns per unit of risk. Microtips Technology is currently generating about -0.08 per unit of volatility. If you would invest  2,800  in Microtips Technology on December 29, 2024 and sell it today you would lose (130.00) from holding Microtips Technology or give up 4.64% of portfolio value over 90 days.

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

Yuan High Tech Development  vs.  Microtips Technology

Yuan High Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yuan High Tech Development 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Microtips Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microtips Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Microtips Technology 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 Yuan High and Microtips Technology

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

The idea behind Yuan High Tech Development and Microtips Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.