Correlation Between Ming Yang and Jiahe Foods

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

Diversification Opportunities for Ming Yang and Jiahe Foods

0.83

Correlation Coefficient

Ming Yang  Jiahe Foods

Very poor diversification

The 3 months correlation between Ming and Jiahe is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Jiahe Foods Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiahe Foods Industry 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 Jiahe Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiahe Foods Industry has no effect on the direction of Ming Yang i.e., Ming Yang and Jiahe Foods go up and down completely randomly.

Pair Corralation between Ming Yang and Jiahe Foods

Assuming the 90 days trading horizon Ming Yang Smart is expected to under-perform the Jiahe Foods. But the stock apears to be less risky and, when comparing its historical volatility, Ming Yang Smart is 2.22 times less risky than Jiahe Foods. The stock trades about -0.14 of its potential returns per unit of risk. The Jiahe Foods Industry is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,323  in Jiahe Foods Industry on September 28, 2024 and sell it today you would earn a total of  44.00  from holding Jiahe Foods Industry or generate 3.33% return on investment over 90 days.

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

Ming Yang Smart  vs.  Jiahe Foods Industry

Ming Yang Smart

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Yang Smart are ranked lower than 8 (%) 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.

Jiahe Foods Industry

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Ming Yang and Jiahe Foods

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

The idea behind Ming Yang Smart and Jiahe Foods Industry 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.