Correlation Between Montage Technology and Anhui Yingjia

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

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

Diversification Opportunities for Montage Technology and Anhui Yingjia

0.15

Correlation Coefficient

Montage Technology  Anhui Yingjia

Average diversification

The 3 months correlation between Montage and Anhui is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Montage Technology Co and Anhui Yingjia Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Yingjia Distillery and Montage Technology 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 Montage Technology Co are associated (or correlated) with Anhui Yingjia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Yingjia Distillery has no effect on the direction of Montage Technology i.e., Montage Technology and Anhui Yingjia go up and down completely randomly.

Pair Corralation between Montage Technology and Anhui Yingjia

Assuming the 90 days trading horizon Montage Technology Co is expected to generate 1.27 times more return on investment than Anhui Yingjia. However, Montage Technology is 1.27 times more volatile than Anhui Yingjia Distillery. It trades about 0.03 of its potential returns per unit of risk. Anhui Yingjia Distillery is currently generating about -0.08 per unit of risk. If you would invest  7,001  in Montage Technology Co on October 25, 2024 and sell it today you would earn a total of  131.00  from holding Montage Technology Co or generate 1.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Montage Technology Co  vs.  Anhui Yingjia Distillery

Montage Technology

Risk-Adjusted Performance

1 of 100

Weak

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

Anhui Yingjia Distillery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Yingjia Distillery 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 Montage Technology and Anhui Yingjia

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

The idea behind Montage Technology Co and Anhui Yingjia Distillery 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.