Correlation Between Shuhua Sports and MayAir Technology

Can any of the company-specific risk be diversified away by investing in both Shuhua Sports and MayAir Technology 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 Shuhua Sports and MayAir Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shuhua Sports Co and MayAir Technology Co, you can compare the effects of market volatilities on Shuhua Sports and MayAir Technology 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 Shuhua Sports with a short position of MayAir Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shuhua Sports and MayAir Technology.

Diversification Opportunities for Shuhua Sports and MayAir Technology

-0.52

Correlation Coefficient

Shuhua Sports  MayAir Technology

Excellent diversification

The 3 months correlation between Shuhua and MayAir is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Shuhua Sports Co and MayAir Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MayAir Technology and Shuhua Sports 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 Shuhua Sports Co are associated (or correlated) with MayAir Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MayAir Technology has no effect on the direction of Shuhua Sports i.e., Shuhua Sports and MayAir Technology go up and down completely randomly.

Pair Corralation between Shuhua Sports and MayAir Technology

Assuming the 90 days trading horizon Shuhua Sports Co is expected to generate 1.9 times more return on investment than MayAir Technology. However, Shuhua Sports is 1.9 times more volatile than MayAir Technology Co. It trades about 0.08 of its potential returns per unit of risk. MayAir Technology Co is currently generating about 0.01 per unit of risk. If you would invest  802.00  in Shuhua Sports Co on October 24, 2024 and sell it today you would earn a total of  42.00  from holding Shuhua Sports Co or generate 5.24% return on investment over 90 days.

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

Shuhua Sports Co  vs.  MayAir Technology Co

Shuhua Sports

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shuhua Sports Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shuhua Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

MayAir Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MayAir Technology Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shuhua Sports and MayAir Technology

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

The idea behind Shuhua Sports Co and MayAir Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.