Correlation Between China Minmetals and Gem-Year Industrial

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

By analyzing existing cross correlation between China Minmetals Rare and Gem Year Industrial Co, you can compare the effects of market volatilities on China Minmetals and Gem-Year Industrial 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 China Minmetals with a short position of Gem-Year Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Minmetals and Gem-Year Industrial.

Diversification Opportunities for China Minmetals and Gem-Year Industrial

0.8

Correlation Coefficient

China Minmetals  Gem-Year Industrial

Very poor diversification

The 3 months correlation between China and Gem-Year is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding China Minmetals Rare and Gem Year Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gem Year Industrial and China Minmetals 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 China Minmetals Rare are associated (or correlated) with Gem-Year Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gem Year Industrial has no effect on the direction of China Minmetals i.e., China Minmetals and Gem-Year Industrial go up and down completely randomly.

Pair Corralation between China Minmetals and Gem-Year Industrial

Assuming the 90 days trading horizon China Minmetals is expected to generate 1.89 times less return on investment than Gem-Year Industrial. In addition to that, China Minmetals is 1.04 times more volatile than Gem Year Industrial Co. It trades about 0.07 of its total potential returns per unit of risk. Gem Year Industrial Co is currently generating about 0.14 per unit of volatility. If you would invest  436.00  in Gem Year Industrial Co on December 23, 2024 and sell it today you would earn a total of  79.00  from holding Gem Year Industrial Co or generate 18.12% return on investment over 90 days.

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

China Minmetals Rare  vs.  Gem Year Industrial Co

China Minmetals Rare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Minmetals Rare are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Minmetals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gem Year Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem-Year Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Minmetals and Gem-Year Industrial

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

The idea behind China Minmetals Rare and Gem Year Industrial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.