Correlation Between Guocheng Mining and Minmetals Capital

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

Diversification Opportunities for Guocheng Mining and Minmetals Capital

0.24

Correlation Coefficient

Guocheng Mining  Minmetals Capital

Modest diversification

The 3 months correlation between Guocheng and Minmetals is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Guocheng Mining Co and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital 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 Minmetals Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minmetals Capital has no effect on the direction of Guocheng Mining i.e., Guocheng Mining and Minmetals Capital go up and down completely randomly.

Pair Corralation between Guocheng Mining and Minmetals Capital

Assuming the 90 days trading horizon Guocheng Mining Co is expected to generate 1.34 times more return on investment than Minmetals Capital. However, Guocheng Mining is 1.34 times more volatile than Minmetals Capital Co. It trades about -0.09 of its potential returns per unit of risk. Minmetals Capital Co is currently generating about -0.2 per unit of risk. If you would invest  1,379  in Guocheng Mining Co on October 22, 2024 and sell it today you would lose (79.00) from holding Guocheng Mining Co or give up 5.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Guocheng Mining Co  vs.  Minmetals Capital Co

Guocheng Mining

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guocheng Mining Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guocheng Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Minmetals Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Guocheng Mining Co and Minmetals Capital 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.