Correlation Between Shenzhen MTC and Changzhou Almaden

Can any of the company-specific risk be diversified away by investing in both Shenzhen MTC and Changzhou Almaden 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 Shenzhen MTC and Changzhou Almaden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen MTC Co and Changzhou Almaden Co, you can compare the effects of market volatilities on Shenzhen MTC and Changzhou Almaden 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 Shenzhen MTC with a short position of Changzhou Almaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen MTC and Changzhou Almaden.

Diversification Opportunities for Shenzhen MTC and Changzhou Almaden

-0.27

Correlation Coefficient

Shenzhen MTC  Changzhou Almaden

Very good diversification

The 3 months correlation between Shenzhen and Changzhou is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen MTC Co and Changzhou Almaden Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changzhou Almaden and Shenzhen MTC 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 Shenzhen MTC Co are associated (or correlated) with Changzhou Almaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changzhou Almaden has no effect on the direction of Shenzhen MTC i.e., Shenzhen MTC and Changzhou Almaden go up and down completely randomly.

Pair Corralation between Shenzhen MTC and Changzhou Almaden

Assuming the 90 days trading horizon Shenzhen MTC Co is expected to generate 1.37 times more return on investment than Changzhou Almaden. However, Shenzhen MTC is 1.37 times more volatile than Changzhou Almaden Co. It trades about 0.03 of its potential returns per unit of risk. Changzhou Almaden Co is currently generating about -0.16 per unit of risk. If you would invest  529.00  in Shenzhen MTC Co on October 27, 2024 and sell it today you would earn a total of  18.00  from holding Shenzhen MTC Co or generate 3.4% return on investment over 90 days.

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

Shenzhen MTC Co  vs.  Changzhou Almaden Co

Shenzhen MTC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen MTC Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen MTC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Changzhou Almaden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changzhou Almaden Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenzhen MTC and Changzhou Almaden

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

The idea behind Shenzhen MTC Co and Changzhou Almaden 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..