Correlation Between Shiny Chemical and Meiloon Industrial

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

By analyzing existing cross correlation between Shiny Chemical Industrial and Meiloon Industrial Co, you can compare the effects of market volatilities on Shiny Chemical and Meiloon Industrial 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 Shiny Chemical with a short position of Meiloon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and Meiloon Industrial.

Diversification Opportunities for Shiny Chemical and Meiloon Industrial

0.31

Correlation Coefficient

Shiny Chemical  Meiloon Industrial

Weak diversification

The 3 months correlation between Shiny and Meiloon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and Meiloon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiloon Industrial and Shiny Chemical 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 Shiny Chemical Industrial are associated (or correlated) with Meiloon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiloon Industrial has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and Meiloon Industrial go up and down completely randomly.

Pair Corralation between Shiny Chemical and Meiloon Industrial

Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to generate 0.69 times more return on investment than Meiloon Industrial. However, Shiny Chemical Industrial is 1.45 times less risky than Meiloon Industrial. It trades about -0.03 of its potential returns per unit of risk. Meiloon Industrial Co is currently generating about -0.25 per unit of risk. If you would invest  16,850  in Shiny Chemical Industrial on September 5, 2024 and sell it today you would lose (250.00) from holding Shiny Chemical Industrial or give up 1.48% of portfolio value over 90 days.

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

Shiny Chemical Industrial  vs.  Meiloon Industrial Co

Shiny Chemical Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shiny Chemical Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shiny Chemical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Meiloon Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Meiloon Industrial Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Meiloon Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shiny Chemical and Meiloon Industrial

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

The idea behind Shiny Chemical Industrial and Meiloon Industrial Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.