Correlation Between MayAir Technology and Beijing Wandong

Can any of the company-specific risk be diversified away by investing in both MayAir Technology and Beijing Wandong 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 MayAir Technology and Beijing Wandong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MayAir Technology Co and Beijing Wandong Medical, you can compare the effects of market volatilities on MayAir Technology and Beijing Wandong 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 MayAir Technology with a short position of Beijing Wandong. Check out your portfolio center. Please also check ongoing floating volatility patterns of MayAir Technology and Beijing Wandong.

Diversification Opportunities for MayAir Technology and Beijing Wandong

0.61

Correlation Coefficient

MayAir Technology  Beijing Wandong

Poor diversification

The 3 months correlation between MayAir and Beijing is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MayAir Technology Co and Beijing Wandong Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Wandong Medical and MayAir Technology 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 MayAir Technology Co are associated (or correlated) with Beijing Wandong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Wandong Medical has no effect on the direction of MayAir Technology i.e., MayAir Technology and Beijing Wandong go up and down completely randomly.

Pair Corralation between MayAir Technology and Beijing Wandong

Assuming the 90 days trading horizon MayAir Technology is expected to generate 1.08 times less return on investment than Beijing Wandong. In addition to that, MayAir Technology is 1.47 times more volatile than Beijing Wandong Medical. It trades about 0.12 of its total potential returns per unit of risk. Beijing Wandong Medical is currently generating about 0.2 per unit of volatility. If you would invest  1,191  in Beijing Wandong Medical on September 15, 2024 and sell it today you would earn a total of  488.00  from holding Beijing Wandong Medical or generate 40.97% return on investment over 90 days.

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

MayAir Technology Co  vs.  Beijing Wandong Medical

MayAir Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MayAir Technology Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MayAir Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing Wandong Medical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Wandong Medical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Wandong sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MayAir Technology and Beijing Wandong

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

The idea behind MayAir Technology Co and Beijing Wandong Medical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.