Correlation Between Hongfa Technology and Mango Excellent

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

By analyzing existing cross correlation between Hongfa Technology Co and Mango Excellent Media, you can compare the effects of market volatilities on Hongfa Technology and Mango Excellent 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 Hongfa Technology with a short position of Mango Excellent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongfa Technology and Mango Excellent.

Diversification Opportunities for Hongfa Technology and Mango Excellent

0.27

Correlation Coefficient

Hongfa Technology  Mango Excellent

Modest diversification

The 3 months correlation between Hongfa and Mango is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hongfa Technology Co and Mango Excellent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mango Excellent Media and Hongfa Technology 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 Hongfa Technology Co are associated (or correlated) with Mango Excellent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mango Excellent Media has no effect on the direction of Hongfa Technology i.e., Hongfa Technology and Mango Excellent go up and down completely randomly.

Pair Corralation between Hongfa Technology and Mango Excellent

Assuming the 90 days trading horizon Hongfa Technology Co is expected to generate 0.84 times more return on investment than Mango Excellent. However, Hongfa Technology Co is 1.19 times less risky than Mango Excellent. It trades about -0.02 of its potential returns per unit of risk. Mango Excellent Media is currently generating about -0.43 per unit of risk. If you would invest  3,193  in Hongfa Technology Co on October 10, 2024 and sell it today you would lose (31.00) from holding Hongfa Technology Co or give up 0.97% of portfolio value over 90 days.

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

Hongfa Technology Co  vs.  Mango Excellent Media

Hongfa Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hongfa Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hongfa Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mango Excellent Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mango Excellent Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mango Excellent is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hongfa Technology and Mango Excellent

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

The idea behind Hongfa Technology Co and Mango Excellent Media 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.