Correlation Between Suzhou Xingye and Midea Group

Can any of the company-specific risk be diversified away by investing in both Suzhou Xingye and Midea Group 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 Suzhou Xingye and Midea Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Suzhou Xingye Material and Midea Group Co, you can compare the effects of market volatilities on Suzhou Xingye and Midea Group 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 Suzhou Xingye with a short position of Midea Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Xingye and Midea Group.

Diversification Opportunities for Suzhou Xingye and Midea Group

-0.49

Correlation Coefficient

Suzhou Xingye  Midea Group

Very good diversification

The 3 months correlation between Suzhou and Midea is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Xingye Material and Midea Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midea Group and Suzhou Xingye 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 Suzhou Xingye Material are associated (or correlated) with Midea Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midea Group has no effect on the direction of Suzhou Xingye i.e., Suzhou Xingye and Midea Group go up and down completely randomly.

Pair Corralation between Suzhou Xingye and Midea Group

Assuming the 90 days trading horizon Suzhou Xingye Material is expected to under-perform the Midea Group. In addition to that, Suzhou Xingye is 2.81 times more volatile than Midea Group Co. It trades about -0.11 of its total potential returns per unit of risk. Midea Group Co is currently generating about 0.09 per unit of volatility. If you would invest  7,258  in Midea Group Co on October 9, 2024 and sell it today you would earn a total of  280.00  from holding Midea Group Co or generate 3.86% return on investment over 90 days.

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

Suzhou Xingye Material  vs.  Midea Group Co

Suzhou Xingye Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzhou Xingye Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Suzhou Xingye is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Midea Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midea Group Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Midea Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Suzhou Xingye and Midea Group

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

The idea behind Suzhou Xingye Material and Midea Group 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.