Correlation Between Ming Yang and Sinosteel Engineering

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

Diversification Opportunities for Ming Yang and Sinosteel Engineering

0.62

Correlation Coefficient

Ming Yang  Sinosteel Engineering

Poor diversification

The 3 months correlation between Ming and Sinosteel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Sinosteel Engineering and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosteel Engineering and 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 Sinosteel Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosteel Engineering and has no effect on the direction of Ming Yang i.e., Ming Yang and Sinosteel Engineering go up and down completely randomly.

Pair Corralation between Ming Yang and Sinosteel Engineering

Assuming the 90 days trading horizon Ming Yang Smart is expected to under-perform the Sinosteel Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Ming Yang Smart is 1.07 times less risky than Sinosteel Engineering. The stock trades about -0.05 of its potential returns per unit of risk. The Sinosteel Engineering and is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  793.00  in Sinosteel Engineering and on December 4, 2024 and sell it today you would lose (113.00) from holding Sinosteel Engineering and or give up 14.25% of portfolio value over 90 days.

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

Ming Yang Smart  vs.  Sinosteel Engineering and

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sinosteel Engineering and

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ming Yang and Sinosteel Engineering

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

The idea behind Ming Yang Smart and Sinosteel Engineering and 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.