Correlation Between Maccura Biotechnology and Hengli Industrial

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

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

Diversification Opportunities for Maccura Biotechnology and Hengli Industrial

0.36

Correlation Coefficient

Maccura Biotechnology  Hengli Industrial

Weak diversification

The 3 months correlation between Maccura and Hengli is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Maccura Biotechnology Co and Hengli Industrial Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengli Industrial and Maccura Biotechnology 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 Maccura Biotechnology Co are associated (or correlated) with Hengli Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengli Industrial has no effect on the direction of Maccura Biotechnology i.e., Maccura Biotechnology and Hengli Industrial go up and down completely randomly.

Pair Corralation between Maccura Biotechnology and Hengli Industrial

Assuming the 90 days trading horizon Maccura Biotechnology is expected to generate 1.12 times less return on investment than Hengli Industrial. But when comparing it to its historical volatility, Maccura Biotechnology Co is 1.08 times less risky than Hengli Industrial. It trades about 0.13 of its potential returns per unit of risk. Hengli Industrial Development is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Hengli Industrial Development on September 13, 2024 and sell it today you would earn a total of  51.00  from holding Hengli Industrial Development or generate 28.02% return on investment over 90 days.

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

Maccura Biotechnology Co  vs.  Hengli Industrial Development

Maccura Biotechnology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maccura Biotechnology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maccura Biotechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

Hengli Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hengli Industrial Development are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hengli Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maccura Biotechnology and Hengli Industrial

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

The idea behind Maccura Biotechnology Co and Hengli Industrial Development 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.