Correlation Between JIN MEDICAL and Meihua International

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

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

Diversification Opportunities for JIN MEDICAL and Meihua International

0.78

Correlation Coefficient

JIN MEDICAL  Meihua International

Poor diversification

The 3 months correlation between JIN and Meihua is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding JIN MEDICAL INTERNATIONAL and Meihua International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meihua International and JIN MEDICAL 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 JIN MEDICAL INTERNATIONAL 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 JIN MEDICAL i.e., JIN MEDICAL and Meihua International go up and down completely randomly.

Pair Corralation between JIN MEDICAL and Meihua International

Given the investment horizon of 90 days JIN MEDICAL INTERNATIONAL is expected to under-perform the Meihua International. In addition to that, JIN MEDICAL is 1.12 times more volatile than Meihua International Medical. It trades about -0.14 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	Significant
Accuracy	100.0%
Values	Daily Returns

JIN MEDICAL INTERNATIONAL  vs.  Meihua International Medical

JIN MEDICAL INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JIN MEDICAL INTERNATIONAL 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 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 JIN MEDICAL and Meihua International

The main advantage of trading using opposite JIN MEDICAL and Meihua International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JIN MEDICAL 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 JIN MEDICAL INTERNATIONAL 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 Transaction History module to view history of all your transactions and understand their impact on performance.