Correlation Between Shaanxi Meineng and China International

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

By analyzing existing cross correlation between Shaanxi Meineng Clean and China International Capital, you can compare the effects of market volatilities on Shaanxi Meineng and China International 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 Shaanxi Meineng with a short position of China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Meineng and China International.

Diversification Opportunities for Shaanxi Meineng and China International

0.37

Correlation Coefficient

Shaanxi Meineng  China International

Weak diversification

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

Pair Corralation between Shaanxi Meineng and China International

Assuming the 90 days trading horizon Shaanxi Meineng Clean is expected to generate 0.62 times more return on investment than China International. However, Shaanxi Meineng Clean is 1.62 times less risky than China International. It trades about 0.08 of its potential returns per unit of risk. China International Capital is currently generating about 0.0 per unit of risk. If you would invest  1,231  in Shaanxi Meineng Clean on December 26, 2024 and sell it today you would earn a total of  82.00  from holding Shaanxi Meineng Clean or generate 6.66% return on investment over 90 days.

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

Shaanxi Meineng Clean  vs.  China International Capital

Shaanxi Meineng Clean

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Meineng Clean are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaanxi Meineng may actually be approaching a critical reversion point that can send shares even higher in April 2025.

China International

Risk-Adjusted Performance

Very Weak

Over the last 90 days China International Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shaanxi Meineng and China International

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

The idea behind Shaanxi Meineng Clean and China International Capital 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.