Correlation Between Ma Kuang and ReaLy Development

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

By analyzing existing cross correlation between Ma Kuang Healthcare and ReaLy Development Construction, you can compare the effects of market volatilities on Ma Kuang and ReaLy Development 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 Ma Kuang with a short position of ReaLy Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ma Kuang and ReaLy Development.

Diversification Opportunities for Ma Kuang and ReaLy Development

-0.38

Correlation Coefficient

Ma Kuang  ReaLy Development

Very good diversification

The 3 months correlation between 4139 and ReaLy is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and ReaLy Development Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReaLy Development and Ma Kuang 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 Ma Kuang Healthcare are associated (or correlated) with ReaLy Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReaLy Development has no effect on the direction of Ma Kuang i.e., Ma Kuang and ReaLy Development go up and down completely randomly.

Pair Corralation between Ma Kuang and ReaLy Development

Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to under-perform the ReaLy Development. In addition to that, Ma Kuang is 1.41 times more volatile than ReaLy Development Construction. It trades about -0.01 of its total potential returns per unit of risk. ReaLy Development Construction is currently generating about 0.1 per unit of volatility. If you would invest  3,665  in ReaLy Development Construction on September 21, 2024 and sell it today you would earn a total of  395.00  from holding ReaLy Development Construction or generate 10.78% return on investment over 90 days.

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

Ma Kuang Healthcare  vs.  ReaLy Development Construction

Ma Kuang Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ma Kuang Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ma Kuang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ReaLy Development

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ReaLy Development Construction are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ReaLy Development may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ma Kuang and ReaLy Development

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

The idea behind Ma Kuang Healthcare and ReaLy Development Construction 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.