Correlation Between China Minmetals and Kingclean Electric

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

Diversification Opportunities for China Minmetals and Kingclean Electric

0.37

Correlation Coefficient

China Minmetals  Kingclean Electric

Weak diversification

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

Pair Corralation between China Minmetals and Kingclean Electric

Assuming the 90 days trading horizon China Minmetals Rare is expected to under-perform the Kingclean Electric. In addition to that, China Minmetals is 1.52 times more volatile than Kingclean Electric Co. It trades about -0.21 of its total potential returns per unit of risk. Kingclean Electric Co is currently generating about -0.11 per unit of volatility. If you would invest  2,319  in Kingclean Electric Co on October 10, 2024 and sell it today you would lose (60.00) from holding Kingclean Electric Co or give up 2.59% of portfolio value over 90 days.

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

China Minmetals Rare  vs.  Kingclean Electric Co

China Minmetals Rare

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Minmetals Rare are ranked lower than 2 (%) 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 February 2025.

Kingclean Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingclean Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with China Minmetals and Kingclean Electric

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

The idea behind China Minmetals Rare and Kingclean Electric 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.