Correlation Between Ming Yang and Lushang Property

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

Diversification Opportunities for Ming Yang and Lushang Property

0.5

Correlation Coefficient

Ming Yang  Lushang Property

Very weak diversification

The 3 months correlation between Ming and Lushang is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Lushang Property Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lushang Property 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 Lushang Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lushang Property has no effect on the direction of Ming Yang i.e., Ming Yang and Lushang Property go up and down completely randomly.

Pair Corralation between Ming Yang and Lushang Property

Assuming the 90 days trading horizon Ming Yang Smart is expected to generate 0.98 times more return on investment than Lushang Property. However, Ming Yang Smart is 1.02 times less risky than Lushang Property. It trades about -0.07 of its potential returns per unit of risk. Lushang Property Co is currently generating about -0.08 per unit of risk. If you would invest  1,282  in Ming Yang Smart on December 25, 2024 and sell it today you would lose (116.00) from holding Ming Yang Smart or give up 9.05% of portfolio value over 90 days.

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

Ming Yang Smart  vs.  Lushang Property 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.

Lushang Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lushang Property Co 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.

Pair Trading with Ming Yang and Lushang Property

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

The idea behind Ming Yang Smart and Lushang Property 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.