Correlation Between China Minmetals and Sino Medical

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

Diversification Opportunities for China Minmetals and Sino Medical

0.54

Correlation Coefficient

China Minmetals  Sino Medical

Very weak diversification

The 3 months correlation between China and Sino is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Minmetals Rare and Sino Medical Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Medical Sciences 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 Sino Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Medical Sciences has no effect on the direction of China Minmetals i.e., China Minmetals and Sino Medical go up and down completely randomly.

Pair Corralation between China Minmetals and Sino Medical

Assuming the 90 days trading horizon China Minmetals is expected to generate 1.06 times less return on investment than Sino Medical. But when comparing it to its historical volatility, China Minmetals Rare is 1.01 times less risky than Sino Medical. It trades about 0.06 of its potential returns per unit of risk. Sino Medical Sciences is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,009  in Sino Medical Sciences on December 24, 2024 and sell it today you would earn a total of  80.00  from holding Sino Medical Sciences or generate 7.93% return on investment over 90 days.

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

China Minmetals Rare  vs.  Sino Medical Sciences

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.

Sino Medical Sciences

Risk-Adjusted Performance

Modest

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

Pair Trading with China Minmetals and Sino Medical

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

The idea behind China Minmetals Rare and Sino Medical Sciences 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .