Correlation Between Changchun BCHT and Ming Yang

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

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

Diversification Opportunities for Changchun BCHT and Ming Yang

0.29

Correlation Coefficient

Changchun BCHT  Ming Yang

Modest diversification

The 3 months correlation between Changchun and Ming is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Changchun BCHT Biotechnology 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 Changchun BCHT 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 Changchun BCHT Biotechnology 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 Changchun BCHT i.e., Changchun BCHT and Ming Yang go up and down completely randomly.

Pair Corralation between Changchun BCHT and Ming Yang

Assuming the 90 days trading horizon Changchun BCHT Biotechnology is expected to under-perform the Ming Yang. In addition to that, Changchun BCHT is 1.0 times more volatile than Ming Yang Smart. It trades about -0.06 of its total potential returns per unit of risk. Ming Yang Smart is currently generating about 0.1 per unit of volatility. If you would invest  1,080  in Ming Yang Smart on September 30, 2024 and sell it today you would earn a total of  205.00  from holding Ming Yang Smart or generate 18.98% return on investment over 90 days.

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

Changchun BCHT Biotechnology  vs.  Ming Yang Smart

Changchun BCHT Biote

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changchun BCHT Biotechnology 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ming Yang Smart

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Yang Smart are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ming Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Changchun BCHT and Ming Yang

The main advantage of trading using opposite Changchun BCHT and Ming Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun BCHT 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 Changchun BCHT Biotechnology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .