Correlation Between Guosheng Financial and Minmetals Capital

Can any of the company-specific risk be diversified away by investing in both Guosheng Financial and Minmetals Capital 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 Guosheng Financial and Minmetals Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guosheng Financial Holding and Minmetals Capital Co, you can compare the effects of market volatilities on Guosheng Financial and Minmetals Capital 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 Guosheng Financial with a short position of Minmetals Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guosheng Financial and Minmetals Capital.

Diversification Opportunities for Guosheng Financial and Minmetals Capital

0.16

Correlation Coefficient

Guosheng Financial  Minmetals Capital

Average diversification

The 3 months correlation between Guosheng and Minmetals is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Guosheng Financial Holding and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital and Guosheng Financial 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 Guosheng Financial Holding are associated (or correlated) with Minmetals Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minmetals Capital has no effect on the direction of Guosheng Financial i.e., Guosheng Financial and Minmetals Capital go up and down completely randomly.

Pair Corralation between Guosheng Financial and Minmetals Capital

Assuming the 90 days trading horizon Guosheng Financial is expected to generate 1.01 times less return on investment than Minmetals Capital. In addition to that, Guosheng Financial is 1.18 times more volatile than Minmetals Capital Co. It trades about 0.12 of its total potential returns per unit of risk. Minmetals Capital Co is currently generating about 0.14 per unit of volatility. If you would invest  384.00  in Minmetals Capital Co on October 4, 2024 and sell it today you would earn a total of  261.00  from holding Minmetals Capital Co or generate 67.97% return on investment over 90 days.

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

Guosheng Financial Holding  vs.  Minmetals Capital Co

Guosheng Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Minmetals Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minmetals Capital Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guosheng Financial and Minmetals Capital

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

The idea behind Guosheng Financial Holding and Minmetals Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.