Correlation Between InfuSystems Holdings and Meihua International

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

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

Diversification Opportunities for InfuSystems Holdings and Meihua International

0.13

Correlation Coefficient

InfuSystems Holdings  Meihua International

Average diversification

The 3 months correlation between InfuSystems and Meihua is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding InfuSystems Holdings and Meihua International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meihua International and InfuSystems Holdings 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 InfuSystems Holdings 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 InfuSystems Holdings i.e., InfuSystems Holdings and Meihua International go up and down completely randomly.

Pair Corralation between InfuSystems Holdings and Meihua International

Given the investment horizon of 90 days InfuSystems Holdings is expected to under-perform the Meihua International. But the stock apears to be less risky and, when comparing its historical volatility, InfuSystems Holdings is 1.02 times less risky than Meihua International. The stock trades about -0.15 of its potential returns per unit of risk. The Meihua International Medical is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Meihua International Medical on December 30, 2024 and sell it today you would lose (3.00) from holding Meihua International Medical or give up 8.33% of portfolio value over 90 days.

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

InfuSystems Holdings  vs.  Meihua International Medical

InfuSystems Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days InfuSystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Meihua International

Risk-Adjusted Performance

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 somewhat strong basic indicators, Meihua International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with InfuSystems Holdings and Meihua International

The main advantage of trading using opposite InfuSystems Holdings and Meihua International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfuSystems Holdings 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 InfuSystems Holdings 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.