Correlation Between Hubei Yingtong and Hainan Mining

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

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

Diversification Opportunities for Hubei Yingtong and Hainan Mining

0.61

Correlation Coefficient

Hubei Yingtong  Hainan Mining

Poor diversification

The 3 months correlation between Hubei and Hainan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Yingtong Telecommunicati and Hainan Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Mining and Hubei Yingtong 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 Hubei Yingtong Telecommunication are associated (or correlated) with Hainan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Mining has no effect on the direction of Hubei Yingtong i.e., Hubei Yingtong and Hainan Mining go up and down completely randomly.

Pair Corralation between Hubei Yingtong and Hainan Mining

Assuming the 90 days trading horizon Hubei Yingtong is expected to generate 1.23 times less return on investment than Hainan Mining. In addition to that, Hubei Yingtong is 1.55 times more volatile than Hainan Mining Co. It trades about 0.02 of its total potential returns per unit of risk. Hainan Mining Co is currently generating about 0.04 per unit of volatility. If you would invest  705.00  in Hainan Mining Co on September 30, 2024 and sell it today you would earn a total of  39.00  from holding Hainan Mining Co or generate 5.53% return on investment over 90 days.

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

Hubei Yingtong Telecommunicati  vs.  Hainan Mining Co

Hubei Yingtong Telec

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Yingtong Telecommunication are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Yingtong may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hainan Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Mining Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hubei Yingtong and Hainan Mining

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

The idea behind Hubei Yingtong Telecommunication and Hainan Mining 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.