Correlation Between Guocheng Mining and JCHX Mining

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

Diversification Opportunities for Guocheng Mining and JCHX Mining

0.3

Correlation Coefficient

Guocheng Mining  JCHX Mining

Weak diversification

The 3 months correlation between Guocheng and JCHX is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Guocheng Mining Co and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management 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 JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Guocheng Mining i.e., Guocheng Mining and JCHX Mining go up and down completely randomly.

Pair Corralation between Guocheng Mining and JCHX Mining

Assuming the 90 days trading horizon Guocheng Mining Co is expected to generate 1.14 times more return on investment than JCHX Mining. However, Guocheng Mining is 1.14 times more volatile than JCHX Mining Management. It trades about 0.21 of its potential returns per unit of risk. JCHX Mining Management is currently generating about 0.01 per unit of risk. If you would invest  928.00  in Guocheng Mining Co on August 31, 2024 and sell it today you would earn a total of  472.00  from holding Guocheng Mining Co or generate 50.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Guocheng Mining Co  vs.  JCHX Mining Management

Guocheng Mining

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guocheng Mining Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guocheng Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Guocheng Mining Co and JCHX Mining Management 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.