Correlation Between Shenzhen Mindray and Universal Scientific

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

By analyzing existing cross correlation between Shenzhen Mindray Bio Medical and Universal Scientific Industrial, you can compare the effects of market volatilities on Shenzhen Mindray and Universal Scientific 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 Shenzhen Mindray with a short position of Universal Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Mindray and Universal Scientific.

Diversification Opportunities for Shenzhen Mindray and Universal Scientific

0.71

Correlation Coefficient

Shenzhen Mindray  Universal Scientific

Poor diversification

The 3 months correlation between Shenzhen and Universal is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Mindray Bio Medical and Universal Scientific Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Scientific and Shenzhen Mindray 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 Shenzhen Mindray Bio Medical are associated (or correlated) with Universal Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Scientific has no effect on the direction of Shenzhen Mindray i.e., Shenzhen Mindray and Universal Scientific go up and down completely randomly.

Pair Corralation between Shenzhen Mindray and Universal Scientific

Assuming the 90 days trading horizon Shenzhen Mindray Bio Medical is expected to under-perform the Universal Scientific. In addition to that, Shenzhen Mindray is 1.14 times more volatile than Universal Scientific Industrial. It trades about -0.06 of its total potential returns per unit of risk. Universal Scientific Industrial is currently generating about 0.03 per unit of volatility. If you would invest  1,597  in Universal Scientific Industrial on September 30, 2024 and sell it today you would earn a total of  48.00  from holding Universal Scientific Industrial or generate 3.01% return on investment over 90 days.

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

Shenzhen Mindray Bio Medical  vs.  Universal Scientific Industria

Shenzhen Mindray Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Mindray Bio Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Universal Scientific

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Scientific Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Universal Scientific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shenzhen Mindray and Universal Scientific

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

The idea behind Shenzhen Mindray Bio Medical and Universal Scientific Industrial 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.