Correlation Between Shanghai Lingyun and Maxvision Technology

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

By analyzing existing cross correlation between Shanghai Lingyun Industries and Maxvision Technology Corp, you can compare the effects of market volatilities on Shanghai Lingyun and Maxvision Technology 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 Shanghai Lingyun with a short position of Maxvision Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Lingyun and Maxvision Technology.

Diversification Opportunities for Shanghai Lingyun and Maxvision Technology

0.91

Correlation Coefficient

Shanghai Lingyun  Maxvision Technology

Almost no diversification

The 3 months correlation between Shanghai and Maxvision is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Lingyun Industries and Maxvision Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxvision Technology Corp and Shanghai Lingyun 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 Shanghai Lingyun Industries are associated (or correlated) with Maxvision Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxvision Technology Corp has no effect on the direction of Shanghai Lingyun i.e., Shanghai Lingyun and Maxvision Technology go up and down completely randomly.

Pair Corralation between Shanghai Lingyun and Maxvision Technology

Assuming the 90 days trading horizon Shanghai Lingyun Industries is expected to generate 1.37 times more return on investment than Maxvision Technology. However, Shanghai Lingyun is 1.37 times more volatile than Maxvision Technology Corp. It trades about 0.17 of its potential returns per unit of risk. Maxvision Technology Corp is currently generating about 0.16 per unit of risk. If you would invest  26.00  in Shanghai Lingyun Industries on September 2, 2024 and sell it today you would earn a total of  13.00  from holding Shanghai Lingyun Industries or generate 50.0% return on investment over 90 days.

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

Shanghai Lingyun Industries  vs.  Maxvision Technology Corp

Shanghai Lingyun Ind

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Lingyun Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Lingyun sustained solid returns over the last few months and may actually be approaching a breakup point.

Maxvision Technology Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maxvision Technology Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maxvision Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shanghai Lingyun and Maxvision Technology

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

The idea behind Shanghai Lingyun Industries and Maxvision Technology Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.