Correlation Between Meihua International and Wearable Health

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

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

Diversification Opportunities for Meihua International and Wearable Health

0.0

Correlation Coefficient

Meihua International  Wearable Health

Pay attention - limited upside

The 3 months correlation between Meihua and Wearable is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Meihua International Medical and Wearable Health Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Health Solutions and Meihua International 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 Meihua International Medical are associated (or correlated) with Wearable Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Health Solutions has no effect on the direction of Meihua International i.e., Meihua International and Wearable Health go up and down completely randomly.

Pair Corralation between Meihua International and Wearable Health

If you would invest  0.01  in Wearable Health Solutions on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Wearable Health Solutions or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Meihua International Medical  vs.  Wearable Health Solutions

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Wearable Health Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wearable Health Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wearable Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Meihua International and Wearable Health

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

The idea behind Meihua International Medical and Wearable Health Solutions 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.