Correlation Between Shengda Mining and Tinavi Medical

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

Diversification Opportunities for Shengda Mining and Tinavi Medical

-0.05

Correlation Coefficient

Shengda Mining  Tinavi Medical

Good diversification

The 3 months correlation between Shengda and Tinavi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shengda Mining Co and Tinavi Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinavi Medical Techn 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 Tinavi Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinavi Medical Techn has no effect on the direction of Shengda Mining i.e., Shengda Mining and Tinavi Medical go up and down completely randomly.

Pair Corralation between Shengda Mining and Tinavi Medical

Assuming the 90 days trading horizon Shengda Mining Co is expected to generate 0.66 times more return on investment than Tinavi Medical. However, Shengda Mining Co is 1.51 times less risky than Tinavi Medical. It trades about 0.02 of its potential returns per unit of risk. Tinavi Medical Technologies is currently generating about 0.01 per unit of risk. If you would invest  1,358  in Shengda Mining Co on October 25, 2024 and sell it today you would earn a total of  14.00  from holding Shengda Mining Co or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Shengda Mining Co  vs.  Tinavi Medical Technologies

Shengda Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shengda Mining Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Tinavi Medical Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tinavi Medical Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tinavi Medical 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 Tinavi Medical

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

The idea behind Shengda Mining Co and Tinavi Medical Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.