Correlation Between Shengda Mining and Tianjin LVYIN

Can any of the company-specific risk be diversified away by investing in both Shengda Mining and Tianjin LVYIN 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 Shengda Mining and Tianjin LVYIN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shengda Mining Co and Tianjin LVYIN Landscape, you can compare the effects of market volatilities on Shengda Mining and Tianjin LVYIN 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 Shengda Mining with a short position of Tianjin LVYIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shengda Mining and Tianjin LVYIN.

Diversification Opportunities for Shengda Mining and Tianjin LVYIN

0.21

Correlation Coefficient

Shengda Mining  Tianjin LVYIN

Modest diversification

The 3 months correlation between Shengda and Tianjin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shengda Mining Co and Tianjin LVYIN Landscape in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin LVYIN Landscape and Shengda Mining 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 Shengda Mining Co are associated (or correlated) with Tianjin LVYIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin LVYIN Landscape has no effect on the direction of Shengda Mining i.e., Shengda Mining and Tianjin LVYIN go up and down completely randomly.

Pair Corralation between Shengda Mining and Tianjin LVYIN

Assuming the 90 days trading horizon Shengda Mining Co is expected to under-perform the Tianjin LVYIN. But the stock apears to be less risky and, when comparing its historical volatility, Shengda Mining Co is 1.8 times less risky than Tianjin LVYIN. The stock trades about -0.21 of its potential returns per unit of risk. The Tianjin LVYIN Landscape is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  748.00  in Tianjin LVYIN Landscape on October 9, 2024 and sell it today you would lose (82.00) from holding Tianjin LVYIN Landscape or give up 10.96% of portfolio value over 90 days.

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

Shengda Mining Co  vs.  Tianjin LVYIN Landscape

Shengda Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengda Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shengda Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tianjin LVYIN Landscape

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin LVYIN Landscape are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tianjin LVYIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shengda Mining and Tianjin LVYIN

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

The idea behind Shengda Mining Co and Tianjin LVYIN Landscape 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.