Correlation Between Hengdian Entertainment and Ming Yang

Can any of the company-specific risk be diversified away by investing in both Hengdian Entertainment and Ming Yang 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 Hengdian Entertainment and Ming Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hengdian Entertainment Co and Ming Yang Smart, you can compare the effects of market volatilities on Hengdian Entertainment and Ming Yang 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 Hengdian Entertainment with a short position of Ming Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengdian Entertainment and Ming Yang.

Diversification Opportunities for Hengdian Entertainment and Ming Yang

0.87

Correlation Coefficient

Hengdian Entertainment  Ming Yang

Very poor diversification

The 3 months correlation between Hengdian and Ming is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hengdian Entertainment Co and Ming Yang Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Yang Smart and Hengdian Entertainment 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 Hengdian Entertainment Co are associated (or correlated) with Ming Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Yang Smart has no effect on the direction of Hengdian Entertainment i.e., Hengdian Entertainment and Ming Yang go up and down completely randomly.

Pair Corralation between Hengdian Entertainment and Ming Yang

Assuming the 90 days trading horizon Hengdian Entertainment Co is expected to under-perform the Ming Yang. In addition to that, Hengdian Entertainment is 1.1 times more volatile than Ming Yang Smart. It trades about -0.02 of its total potential returns per unit of risk. Ming Yang Smart is currently generating about 0.01 per unit of volatility. If you would invest  1,167  in Ming Yang Smart on October 6, 2024 and sell it today you would lose (46.00) from holding Ming Yang Smart or give up 3.94% of portfolio value over 90 days.

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

Hengdian Entertainment Co  vs.  Ming Yang Smart

Hengdian Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hengdian Entertainment Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hengdian Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ming Yang Smart

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Ming Yang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hengdian Entertainment and Ming Yang

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

The idea behind Hengdian Entertainment Co and Ming Yang Smart 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.