Correlation Between Meihua International and GlucoTrack

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

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

Diversification Opportunities for Meihua International and GlucoTrack

0.57

Correlation Coefficient

Meihua International  GlucoTrack

Very weak diversification

The 3 months correlation between Meihua and GlucoTrack is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Meihua International Medical and GlucoTrack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlucoTrack and Meihua International 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 Meihua International Medical are associated (or correlated) with GlucoTrack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlucoTrack has no effect on the direction of Meihua International i.e., Meihua International and GlucoTrack go up and down completely randomly.

Pair Corralation between Meihua International and GlucoTrack

Given the investment horizon of 90 days Meihua International Medical is expected to generate 0.36 times more return on investment than GlucoTrack. However, Meihua International Medical is 2.75 times less risky than GlucoTrack. It trades about 0.16 of its potential returns per unit of risk. GlucoTrack is currently generating about -0.9 per unit of risk. If you would invest  32.00  in Meihua International Medical on November 29, 2024 and sell it today you would earn a total of  3.00  from holding Meihua International Medical or generate 9.38% return on investment over 90 days.

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

Meihua International Medical  vs.  GlucoTrack

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

GlucoTrack

Risk-Adjusted Performance

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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Meihua International and GlucoTrack

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

The idea behind Meihua International Medical and GlucoTrack 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.