Correlation Between Wetouch Technology and MDJM

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

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

Diversification Opportunities for Wetouch Technology and MDJM

0.73

Correlation Coefficient

Wetouch Technology  MDJM

Poor diversification

The 3 months correlation between Wetouch and MDJM is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wetouch Technology Common and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM and Wetouch Technology 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 Wetouch Technology Common are associated (or correlated) with MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Wetouch Technology i.e., Wetouch Technology and MDJM go up and down completely randomly.

Pair Corralation between Wetouch Technology and MDJM

Given the investment horizon of 90 days Wetouch Technology Common is expected to generate 0.44 times more return on investment than MDJM. However, Wetouch Technology Common is 2.3 times less risky than MDJM. It trades about -0.01 of its potential returns per unit of risk. MDJM is currently generating about -0.01 per unit of risk. If you would invest  169.00  in Wetouch Technology Common on October 12, 2024 and sell it today you would lose (5.00) from holding Wetouch Technology Common or give up 2.96% of portfolio value over 90 days.

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

Wetouch Technology Common  vs.  MDJM

Wetouch Technology Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wetouch Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

MDJM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Wetouch Technology and MDJM

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

The idea behind Wetouch Technology Common and MDJM 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.