Correlation Between Ming Yang and Kontour Medical

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

Diversification Opportunities for Ming Yang and Kontour Medical

-0.21

Correlation Coefficient

Ming Yang  Kontour Medical

Very good diversification

The 3 months correlation between Ming and Kontour is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Kontour Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontour Medical Tech 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 Kontour Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontour Medical Tech has no effect on the direction of Ming Yang i.e., Ming Yang and Kontour Medical go up and down completely randomly.

Pair Corralation between Ming Yang and Kontour Medical

Assuming the 90 days trading horizon Ming Yang Smart is expected to under-perform the Kontour Medical. But the stock apears to be less risky and, when comparing its historical volatility, Ming Yang Smart is 1.49 times less risky than Kontour Medical. The stock trades about -0.11 of its potential returns per unit of risk. The Kontour Medical Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,877  in Kontour Medical Technology on December 29, 2024 and sell it today you would lose (188.00) from holding Kontour Medical Technology or give up 6.53% of portfolio value over 90 days.

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

Ming Yang Smart  vs.  Kontour Medical Technology

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.

Kontour Medical Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kontour Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kontour Medical 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 Kontour Medical

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

The idea behind Ming Yang Smart and Kontour Medical Technology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.