Correlation Between Guocheng Mining and Hainan Haiyao

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

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

Diversification Opportunities for Guocheng Mining and Hainan Haiyao

0.04

Correlation Coefficient

Guocheng Mining  Hainan Haiyao

Significant diversification

The 3 months correlation between Guocheng and Hainan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Guocheng Mining Co and Hainan Haiyao Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Haiyao and Guocheng 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 Guocheng Mining Co are associated (or correlated) with Hainan Haiyao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Haiyao has no effect on the direction of Guocheng Mining i.e., Guocheng Mining and Hainan Haiyao go up and down completely randomly.

Pair Corralation between Guocheng Mining and Hainan Haiyao

Assuming the 90 days trading horizon Guocheng Mining Co is expected to generate 0.8 times more return on investment than Hainan Haiyao. However, Guocheng Mining Co is 1.25 times less risky than Hainan Haiyao. It trades about 0.01 of its potential returns per unit of risk. Hainan Haiyao Co is currently generating about -0.02 per unit of risk. If you would invest  1,271  in Guocheng Mining Co on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Guocheng Mining Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Guocheng Mining Co  vs.  Hainan Haiyao Co

Guocheng Mining

Risk-Adjusted Performance

Very Weak

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

Hainan Haiyao

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Guocheng Mining and Hainan Haiyao

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

The idea behind Guocheng Mining Co and Hainan Haiyao Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.