Correlation Between Tieling Newcity and China Nonferrous

Can any of the company-specific risk be diversified away by investing in both Tieling Newcity and China Nonferrous 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 Tieling Newcity and China Nonferrous into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tieling Newcity Investment and China Nonferrous Metal, you can compare the effects of market volatilities on Tieling Newcity and China Nonferrous 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 Tieling Newcity with a short position of China Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tieling Newcity and China Nonferrous.

Diversification Opportunities for Tieling Newcity and China Nonferrous

0.37

Correlation Coefficient

Tieling Newcity  China Nonferrous

Weak diversification

The 3 months correlation between Tieling and China is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tieling Newcity Investment and China Nonferrous Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Nonferrous Metal and Tieling Newcity 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 Tieling Newcity Investment are associated (or correlated) with China Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Nonferrous Metal has no effect on the direction of Tieling Newcity i.e., Tieling Newcity and China Nonferrous go up and down completely randomly.

Pair Corralation between Tieling Newcity and China Nonferrous

Assuming the 90 days trading horizon Tieling Newcity Investment is expected to generate 2.17 times more return on investment than China Nonferrous. However, Tieling Newcity is 2.17 times more volatile than China Nonferrous Metal. It trades about 0.09 of its potential returns per unit of risk. China Nonferrous Metal is currently generating about 0.08 per unit of risk. If you would invest  294.00  in Tieling Newcity Investment on December 26, 2024 and sell it today you would earn a total of  36.00  from holding Tieling Newcity Investment or generate 12.24% return on investment over 90 days.

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

Tieling Newcity Investment  vs.  China Nonferrous Metal

Tieling Newcity Inve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tieling Newcity Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tieling Newcity sustained solid returns over the last few months and may actually be approaching a breakup point.

China Nonferrous Metal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Nonferrous Metal are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Nonferrous is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tieling Newcity and China Nonferrous

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

The idea behind Tieling Newcity Investment and China Nonferrous 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.