Correlation Between Guocheng Mining and Piotech

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

Diversification Opportunities for Guocheng Mining and Piotech

0.7

Correlation Coefficient

Guocheng Mining  Piotech

Poor diversification

The 3 months correlation between Guocheng and Piotech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Guocheng Mining Co and Piotech Inc A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piotech Inc A 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 Piotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piotech Inc A has no effect on the direction of Guocheng Mining i.e., Guocheng Mining and Piotech go up and down completely randomly.

Pair Corralation between Guocheng Mining and Piotech

Assuming the 90 days trading horizon Guocheng Mining Co is expected to generate 2.11 times more return on investment than Piotech. However, Guocheng Mining is 2.11 times more volatile than Piotech Inc A. It trades about -0.04 of its potential returns per unit of risk. Piotech Inc A is currently generating about -0.34 per unit of risk. If you would invest  1,346  in Guocheng Mining Co on September 28, 2024 and sell it today you would lose (75.00) from holding Guocheng Mining Co or give up 5.57% of portfolio value over 90 days.

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

Guocheng Mining Co  vs.  Piotech Inc A

Guocheng Mining

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guocheng Mining Co are ranked lower than 3 (%) 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 January 2025.

Piotech Inc A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Piotech Inc A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Piotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guocheng Mining and Piotech

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

The idea behind Guocheng Mining Co and Piotech Inc A 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..