Correlation Between Ming Yang and Dezhan HealthCare

Can any of the company-specific risk be diversified away by investing in both Ming Yang and Dezhan HealthCare 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 Ming Yang and Dezhan HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ming Yang Smart and Dezhan HealthCare Co, you can compare the effects of market volatilities on Ming Yang and Dezhan HealthCare 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 Ming Yang with a short position of Dezhan HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Yang and Dezhan HealthCare.

Diversification Opportunities for Ming Yang and Dezhan HealthCare

0.69

Correlation Coefficient

Ming Yang  Dezhan HealthCare

Poor diversification

The 3 months correlation between Ming and Dezhan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare and Ming Yang 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 Ming Yang Smart are associated (or correlated) with Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of Ming Yang i.e., Ming Yang and Dezhan HealthCare go up and down completely randomly.

Pair Corralation between Ming Yang and Dezhan HealthCare

Assuming the 90 days trading horizon Ming Yang Smart is expected to under-perform the Dezhan HealthCare. But the stock apears to be less risky and, when comparing its historical volatility, Ming Yang Smart is 1.32 times less risky than Dezhan HealthCare. The stock trades about -0.06 of its potential returns per unit of risk. The Dezhan HealthCare Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  339.00  in Dezhan HealthCare Co on December 24, 2024 and sell it today you would earn a total of  17.00  from holding Dezhan HealthCare Co or generate 5.01% return on investment over 90 days.

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

Ming Yang Smart  vs.  Dezhan HealthCare Co

Ming Yang Smart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ming Yang Smart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dezhan HealthCare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dezhan HealthCare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ming Yang and Dezhan HealthCare

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

The idea behind Ming Yang Smart and Dezhan HealthCare Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.