Correlation Between MayAir Technology and Central Plains

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

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

Diversification Opportunities for MayAir Technology and Central Plains

0.51

Correlation Coefficient

MayAir Technology  Central Plains

Very weak diversification

The 3 months correlation between MayAir and Central is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MayAir Technology Co and Central Plains Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plains Envir and MayAir 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 MayAir Technology Co are associated (or correlated) with Central Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plains Envir has no effect on the direction of MayAir Technology i.e., MayAir Technology and Central Plains go up and down completely randomly.

Pair Corralation between MayAir Technology and Central Plains

Assuming the 90 days trading horizon MayAir Technology Co is expected to generate 1.84 times more return on investment than Central Plains. However, MayAir Technology is 1.84 times more volatile than Central Plains Environment. It trades about 0.08 of its potential returns per unit of risk. Central Plains Environment is currently generating about 0.07 per unit of risk. If you would invest  2,590  in MayAir Technology Co on October 22, 2024 and sell it today you would earn a total of  832.00  from holding MayAir Technology Co or generate 32.12% return on investment over 90 days.

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

MayAir Technology Co  vs.  Central Plains Environment

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.

Central Plains Envir

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Plains Environment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Central Plains is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MayAir Technology and Central Plains

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

The idea behind MayAir Technology Co and Central Plains Environment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.