Correlation Between GlucoTrack and Meihua International

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

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

Diversification Opportunities for GlucoTrack and Meihua International

0.83

Correlation Coefficient

GlucoTrack  Meihua International

Very poor diversification

The 3 months correlation between GlucoTrack and Meihua is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GlucoTrack and Meihua International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meihua International and GlucoTrack 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 GlucoTrack are associated (or correlated) with Meihua International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meihua International has no effect on the direction of GlucoTrack i.e., GlucoTrack and Meihua International go up and down completely randomly.

Pair Corralation between GlucoTrack and Meihua International

Given the investment horizon of 90 days GlucoTrack is expected to under-perform the Meihua International. In addition to that, GlucoTrack is 1.44 times more volatile than Meihua International Medical. It trades about -0.2 of its total potential returns per unit of risk. Meihua International Medical is currently generating about -0.07 per unit of volatility. If you would invest  97.00  in Meihua International Medical on September 2, 2024 and sell it today you would lose (44.00) from holding Meihua International Medical or give up 45.36% of portfolio value over 90 days.

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

GlucoTrack  vs.  Meihua International Medical

GlucoTrack

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlucoTrack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Meihua International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meihua International Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with GlucoTrack and Meihua International

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

The idea behind GlucoTrack and Meihua International Medical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.