Correlation Between MayAir Technology and China Marine

Can any of the company-specific risk be diversified away by investing in both MayAir Technology and China Marine 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 China Marine 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 China Marine Information, you can compare the effects of market volatilities on MayAir Technology and China Marine 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 China Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of MayAir Technology and China Marine.

Diversification Opportunities for MayAir Technology and China Marine

0.43

Correlation Coefficient

MayAir Technology  China Marine

Very weak diversification

The 3 months correlation between MayAir and China is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding MayAir Technology Co and China Marine Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Marine Information 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 China Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Marine Information has no effect on the direction of MayAir Technology i.e., MayAir Technology and China Marine go up and down completely randomly.

Pair Corralation between MayAir Technology and China Marine

Assuming the 90 days trading horizon MayAir Technology is expected to generate 1.18 times less return on investment than China Marine. But when comparing it to its historical volatility, MayAir Technology Co is 1.21 times less risky than China Marine. It trades about 0.06 of its potential returns per unit of risk. China Marine Information is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,798  in China Marine Information on December 25, 2024 and sell it today you would earn a total of  220.00  from holding China Marine Information or generate 7.86% 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.  China Marine Information

MayAir Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MayAir Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MayAir Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

China Marine Information

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Marine Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Marine may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MayAir Technology and China Marine

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

The idea behind MayAir Technology Co and China Marine Information 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.