Correlation Between Do Fluoride and Chengtun Mining

Can any of the company-specific risk be diversified away by investing in both Do Fluoride and Chengtun Mining 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 Do Fluoride and Chengtun Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Do Fluoride Chemicals Co and Chengtun Mining Group, you can compare the effects of market volatilities on Do Fluoride and Chengtun Mining 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 Do Fluoride with a short position of Chengtun Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Do Fluoride and Chengtun Mining.

Diversification Opportunities for Do Fluoride and Chengtun Mining

0.11

Correlation Coefficient

Do Fluoride  Chengtun Mining

Average diversification

The 3 months correlation between 002407 and Chengtun is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Do Fluoride Chemicals Co and Chengtun Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengtun Mining Group and Do Fluoride 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 Do Fluoride Chemicals Co are associated (or correlated) with Chengtun Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengtun Mining Group has no effect on the direction of Do Fluoride i.e., Do Fluoride and Chengtun Mining go up and down completely randomly.

Pair Corralation between Do Fluoride and Chengtun Mining

Assuming the 90 days trading horizon Do Fluoride Chemicals Co is expected to under-perform the Chengtun Mining. But the stock apears to be less risky and, when comparing its historical volatility, Do Fluoride Chemicals Co is 1.23 times less risky than Chengtun Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Chengtun Mining Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  481.00  in Chengtun Mining Group on December 27, 2024 and sell it today you would earn a total of  121.00  from holding Chengtun Mining Group or generate 25.16% return on investment over 90 days.

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

Do Fluoride Chemicals Co  vs.  Chengtun Mining Group

Do Fluoride Chemicals

Risk-Adjusted Performance

Very Weak

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

Chengtun Mining Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Do Fluoride and Chengtun Mining

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

The idea behind Do Fluoride Chemicals Co and Chengtun Mining Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.