Correlation Between Man Wah and Viomi Technology

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

By analyzing existing cross correlation between Man Wah Holdings and Viomi Technology ADR, you can compare the effects of market volatilities on Man Wah and Viomi Technology 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 Man Wah with a short position of Viomi Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Man Wah and Viomi Technology.

Diversification Opportunities for Man Wah and Viomi Technology

-0.33

Correlation Coefficient

Man Wah  Viomi Technology

Very good diversification

The 3 months correlation between Man and Viomi is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Man Wah Holdings and Viomi Technology ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viomi Technology ADR and Man Wah 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 Man Wah Holdings are associated (or correlated) with Viomi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viomi Technology ADR has no effect on the direction of Man Wah i.e., Man Wah and Viomi Technology go up and down completely randomly.

Pair Corralation between Man Wah and Viomi Technology

Assuming the 90 days horizon Man Wah Holdings is expected to under-perform the Viomi Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, Man Wah Holdings is 1.42 times less risky than Viomi Technology. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Viomi Technology ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Viomi Technology ADR on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Viomi Technology ADR or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Man Wah Holdings  vs.  Viomi Technology ADR

Man Wah Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Man Wah Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, Man Wah showed solid returns over the last few months and may actually be approaching a breakup point.

Viomi Technology ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viomi Technology ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viomi Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Man Wah and Viomi Technology

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

The idea behind Man Wah Holdings and Viomi Technology ADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.