Correlation Between Shenzhen MTC and Sino Platinum

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

Diversification Opportunities for Shenzhen MTC and Sino Platinum

0.91

Correlation Coefficient

Shenzhen MTC  Sino Platinum

Almost no diversification

The 3 months correlation between Shenzhen and Sino is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen MTC Co and Sino Platinum Metals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Platinum Metals 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 Sino Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Platinum Metals has no effect on the direction of Shenzhen MTC i.e., Shenzhen MTC and Sino Platinum go up and down completely randomly.

Pair Corralation between Shenzhen MTC and Sino Platinum

Assuming the 90 days trading horizon Shenzhen MTC is expected to generate 1.36 times less return on investment than Sino Platinum. In addition to that, Shenzhen MTC is 1.33 times more volatile than Sino Platinum Metals Co. It trades about 0.07 of its total potential returns per unit of risk. Sino Platinum Metals Co is currently generating about 0.13 per unit of volatility. If you would invest  1,205  in Sino Platinum Metals Co on September 4, 2024 and sell it today you would earn a total of  214.00  from holding Sino Platinum Metals Co or generate 17.76% return on investment over 90 days.

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

Shenzhen MTC Co  vs.  Sino Platinum Metals Co

Shenzhen MTC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen MTC Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen MTC sustained solid returns over the last few months and may actually be approaching a breakup point.

Sino Platinum Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Platinum Metals Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sino Platinum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen MTC and Sino Platinum

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

The idea behind Shenzhen MTC Co and Sino Platinum Metals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.