Correlation Between Ming Yang and Fujian Anjoy

Can any of the company-specific risk be diversified away by investing in both Ming Yang and Fujian Anjoy 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 Ming Yang and Fujian Anjoy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ming Yang Smart and Fujian Anjoy Foods, you can compare the effects of market volatilities on Ming Yang and Fujian Anjoy 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 Ming Yang with a short position of Fujian Anjoy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Yang and Fujian Anjoy.

Diversification Opportunities for Ming Yang and Fujian Anjoy

0.42

Correlation Coefficient

Ming Yang  Fujian Anjoy

Very weak diversification

The 3 months correlation between Ming and Fujian is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Fujian Anjoy Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Anjoy Foods and Ming Yang 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 Ming Yang Smart are associated (or correlated) with Fujian Anjoy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Anjoy Foods has no effect on the direction of Ming Yang i.e., Ming Yang and Fujian Anjoy go up and down completely randomly.

Pair Corralation between Ming Yang and Fujian Anjoy

Assuming the 90 days trading horizon Ming Yang Smart is expected to under-perform the Fujian Anjoy. But the stock apears to be less risky and, when comparing its historical volatility, Ming Yang Smart is 1.05 times less risky than Fujian Anjoy. The stock trades about -0.05 of its potential returns per unit of risk. The Fujian Anjoy Foods is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  16,182  in Fujian Anjoy Foods on September 26, 2024 and sell it today you would lose (7,642) from holding Fujian Anjoy Foods or give up 47.23% of portfolio value over 90 days.

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

Ming Yang Smart  vs.  Fujian Anjoy Foods

Ming Yang Smart

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Yang Smart are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ming Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Fujian Anjoy Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Anjoy Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Anjoy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ming Yang and Fujian Anjoy

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

The idea behind Ming Yang Smart and Fujian Anjoy Foods 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.