Correlation Between Ming Yang and Empyrean Technology

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

Diversification Opportunities for Ming Yang and Empyrean Technology

0.92

Correlation Coefficient

Ming Yang  Empyrean Technology

Almost no diversification

The 3 months correlation between Ming and Empyrean is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Empyrean Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empyrean Technology 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 Empyrean Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empyrean Technology has no effect on the direction of Ming Yang i.e., Ming Yang and Empyrean Technology go up and down completely randomly.

Pair Corralation between Ming Yang and Empyrean Technology

Assuming the 90 days trading horizon Ming Yang Smart is expected to under-perform the Empyrean Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ming Yang Smart is 1.33 times less risky than Empyrean Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Empyrean Technology Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,964  in Empyrean Technology Co on September 19, 2024 and sell it today you would earn a total of  3,263  from holding Empyrean Technology Co or generate 36.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.79%
Values	Daily Returns

Ming Yang Smart  vs.  Empyrean Technology Co

Ming Yang Smart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Yang Smart are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ming Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Empyrean Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Empyrean Technology Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Empyrean Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ming Yang and Empyrean Technology

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

The idea behind Ming Yang Smart and Empyrean Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.