Correlation Between China Minmetals and Kontour Medical

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

Diversification Opportunities for China Minmetals and Kontour Medical

0.17

Correlation Coefficient

China Minmetals  Kontour Medical

Average diversification

The 3 months correlation between China and Kontour is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding China Minmetals Rare and Kontour Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontour Medical Tech 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 Kontour Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontour Medical Tech has no effect on the direction of China Minmetals i.e., China Minmetals and Kontour Medical go up and down completely randomly.

Pair Corralation between China Minmetals and Kontour Medical

Assuming the 90 days trading horizon China Minmetals Rare is expected to generate 0.74 times more return on investment than Kontour Medical. However, China Minmetals Rare is 1.36 times less risky than Kontour Medical. It trades about 0.08 of its potential returns per unit of risk. Kontour Medical Technology is currently generating about 0.01 per unit of risk. If you would invest  2,842  in China Minmetals Rare on December 25, 2024 and sell it today you would earn a total of  282.00  from holding China Minmetals Rare or generate 9.92% return on investment over 90 days.

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

China Minmetals Rare  vs.  Kontour Medical Technology

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 6 (%) 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.

Kontour Medical Tech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kontour Medical Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kontour Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Minmetals and Kontour Medical

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

The idea behind China Minmetals Rare and Kontour Medical Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.