Correlation Between Shengda Mining and King-Strong New

Can any of the company-specific risk be diversified away by investing in both Shengda Mining and King-Strong New 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 King-Strong New 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 King Strong New Material, you can compare the effects of market volatilities on Shengda Mining and King-Strong New 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 King-Strong New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shengda Mining and King-Strong New.

Diversification Opportunities for Shengda Mining and King-Strong New

-0.1

Correlation Coefficient

Shengda Mining  King-Strong New

Good diversification

The 3 months correlation between Shengda and King-Strong is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shengda Mining Co and King Strong New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Strong New 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 King-Strong New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Strong New has no effect on the direction of Shengda Mining i.e., Shengda Mining and King-Strong New go up and down completely randomly.

Pair Corralation between Shengda Mining and King-Strong New

Assuming the 90 days trading horizon Shengda Mining Co is expected to generate 0.69 times more return on investment than King-Strong New. However, Shengda Mining Co is 1.46 times less risky than King-Strong New. It trades about 0.1 of its potential returns per unit of risk. King Strong New Material is currently generating about -0.04 per unit of risk. If you would invest  1,338  in Shengda Mining Co on December 11, 2024 and sell it today you would earn a total of  136.00  from holding Shengda Mining Co or generate 10.16% return on investment over 90 days.

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

Shengda Mining Co  vs.  King Strong New Material

Shengda Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shengda Mining Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shengda Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

King Strong New

Risk-Adjusted Performance

Very Weak

Over the last 90 days King Strong New Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shengda Mining and King-Strong New

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

The idea behind Shengda Mining Co and King Strong New Material 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.