Correlation Between Xiangyu Medical and Midea Group

Can any of the company-specific risk be diversified away by investing in both Xiangyu Medical and Midea Group 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 Xiangyu Medical and Midea Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Xiangyu Medical and Midea Group

-0.25

Correlation Coefficient

Xiangyu Medical  Midea Group

Very good diversification

The 3 months correlation between Xiangyu and Midea is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyu Medical Co and Midea Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midea Group and Xiangyu Medical 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 Xiangyu Medical Co are associated (or correlated) with Midea Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midea Group has no effect on the direction of Xiangyu Medical i.e., Xiangyu Medical and Midea Group go up and down completely randomly.

Pair Corralation between Xiangyu Medical and Midea Group

Assuming the 90 days trading horizon Xiangyu Medical Co is expected to generate 3.19 times more return on investment than Midea Group. However, Xiangyu Medical is 3.19 times more volatile than Midea Group Co. It trades about 0.03 of its potential returns per unit of risk. Midea Group Co is currently generating about -0.02 per unit of risk. If you would invest  2,883  in Xiangyu Medical Co on October 24, 2024 and sell it today you would earn a total of  66.00  from holding Xiangyu Medical Co or generate 2.29% return on investment over 90 days.

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

Xiangyu Medical Co  vs.  Midea Group Co

Xiangyu Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyu Medical Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangyu Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Midea Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midea Group Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Midea Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xiangyu Medical and Midea Group

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

The idea behind Xiangyu Medical Co and Midea Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .