Correlation Between Meihua International and Alignment Healthcare

Can any of the company-specific risk be diversified away by investing in both Meihua International and Alignment Healthcare 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 Alignment Healthcare 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 Alignment Healthcare LLC, you can compare the effects of market volatilities on Meihua International and Alignment Healthcare 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 Alignment Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meihua International and Alignment Healthcare.

Diversification Opportunities for Meihua International and Alignment Healthcare

-0.08

Correlation Coefficient

Meihua International  Alignment Healthcare

Good diversification

The 3 months correlation between Meihua and Alignment is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Meihua International Medical and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC 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 Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of Meihua International i.e., Meihua International and Alignment Healthcare go up and down completely randomly.

Pair Corralation between Meihua International and Alignment Healthcare

Given the investment horizon of 90 days Meihua International Medical is expected to generate 2.81 times more return on investment than Alignment Healthcare. However, Meihua International is 2.81 times more volatile than Alignment Healthcare LLC. It trades about 0.1 of its potential returns per unit of risk. Alignment Healthcare LLC is currently generating about -0.07 per unit of risk. If you would invest  27.00  in Meihua International Medical on May 5, 2025 and sell it today you would earn a total of  10.00  from holding Meihua International Medical or generate 37.04% return on investment over 90 days.

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

Meihua International Medical  vs.  Alignment Healthcare LLC

Meihua International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meihua International Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meihua International sustained solid returns over the last few months and may actually be approaching a breakup point.

Alignment Healthcare LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alignment Healthcare LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Meihua International and Alignment Healthcare

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

The idea behind Meihua International Medical and Alignment Healthcare LLC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.