Correlation Between Meihua International and InfuSystems Holdings

Can any of the company-specific risk be diversified away by investing in both Meihua International and InfuSystems Holdings 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 InfuSystems Holdings 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 InfuSystems Holdings, you can compare the effects of market volatilities on Meihua International and InfuSystems Holdings 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 InfuSystems Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meihua International and InfuSystems Holdings.

Diversification Opportunities for Meihua International and InfuSystems Holdings

0.13

Correlation Coefficient

Meihua International  InfuSystems Holdings

Average diversification

The 3 months correlation between Meihua and InfuSystems is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Meihua International Medical and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings 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 InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of Meihua International i.e., Meihua International and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between Meihua International and InfuSystems Holdings

Given the investment horizon of 90 days Meihua International Medical is expected to generate 1.02 times more return on investment than InfuSystems Holdings. However, Meihua International is 1.02 times more volatile than InfuSystems Holdings. It trades about -0.02 of its potential returns per unit of risk. InfuSystems Holdings is currently generating about -0.15 per unit of risk. 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

Meihua International Medical  vs.  InfuSystems Holdings

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.

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.

Pair Trading with Meihua International and InfuSystems Holdings

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

The idea behind Meihua International Medical and InfuSystems Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.