Correlation Between Tongling Nonferrous and Ye Chiu

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Can any of the company-specific risk be diversified away by investing in both Tongling Nonferrous and Ye Chiu 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 Tongling Nonferrous and Ye Chiu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tongling Nonferrous Metals and Ye Chiu Metal, you can compare the effects of market volatilities on Tongling Nonferrous and Ye Chiu 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 Tongling Nonferrous with a short position of Ye Chiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongling Nonferrous and Ye Chiu.

Diversification Opportunities for Tongling Nonferrous and Ye Chiu

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tongling and 601388 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tongling Nonferrous Metals and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal and Tongling Nonferrous 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 Tongling Nonferrous Metals are associated (or correlated) with Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Tongling Nonferrous i.e., Tongling Nonferrous and Ye Chiu go up and down completely randomly.

Pair Corralation between Tongling Nonferrous and Ye Chiu

Assuming the 90 days trading horizon Tongling Nonferrous is expected to generate 2.14 times less return on investment than Ye Chiu. But when comparing it to its historical volatility, Tongling Nonferrous Metals is 1.27 times less risky than Ye Chiu. It trades about 0.03 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Ye Chiu Metal on October 21, 2024 and sell it today you would earn a total of  30.00  from holding Ye Chiu Metal or generate 14.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tongling Nonferrous Metals  vs.  Ye Chiu Metal

 Performance 
       Timeline  
Tongling Nonferrous 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tongling Nonferrous Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tongling Nonferrous is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Ye Chiu Metal 

Risk-Adjusted Performance

0 of 100

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

Tongling Nonferrous and Ye Chiu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tongling Nonferrous and Ye Chiu

The main advantage of trading using opposite Tongling Nonferrous and Ye Chiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongling Nonferrous position performs unexpectedly, Ye Chiu 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 Ye Chiu will offset losses from the drop in Ye Chiu's long position.
The idea behind Tongling Nonferrous Metals and Ye Chiu Metal 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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