Correlation Between LeMaitre Vascular and Meihua International

Can any of the company-specific risk be diversified away by investing in both LeMaitre Vascular and Meihua International 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 LeMaitre Vascular and Meihua International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LeMaitre Vascular and Meihua International Medical, you can compare the effects of market volatilities on LeMaitre Vascular and Meihua International 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 LeMaitre Vascular with a short position of Meihua International. Check out your portfolio center. Please also check ongoing floating volatility patterns of LeMaitre Vascular and Meihua International.

Diversification Opportunities for LeMaitre Vascular and Meihua International

-0.71

Correlation Coefficient

LeMaitre Vascular  Meihua International

Pay attention - limited upside

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

Pair Corralation between LeMaitre Vascular and Meihua International

Given the investment horizon of 90 days LeMaitre Vascular is expected to generate 0.21 times more return on investment than Meihua International. However, LeMaitre Vascular is 4.68 times less risky than Meihua International. It trades about 0.18 of its potential returns per unit of risk. Meihua International Medical is currently generating about -0.07 per unit of risk. If you would invest  8,734  in LeMaitre Vascular on August 31, 2024 and sell it today you would earn a total of  1,846  from holding LeMaitre Vascular or generate 21.14% return on investment over 90 days.

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

LeMaitre Vascular  vs.  Meihua International Medical

LeMaitre Vascular

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LeMaitre Vascular are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LeMaitre Vascular unveiled solid returns over the last few months and may actually be approaching a breakup point.

Meihua International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meihua International Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LeMaitre Vascular and Meihua International

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

The idea behind LeMaitre Vascular and Meihua International 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.