Correlation Between Uroica Mining and Changjiang Jinggong

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

By analyzing existing cross correlation between Uroica Mining Safety and Changjiang Jinggong Steel, you can compare the effects of market volatilities on Uroica Mining and Changjiang Jinggong 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 Uroica Mining with a short position of Changjiang Jinggong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uroica Mining and Changjiang Jinggong.

Diversification Opportunities for Uroica Mining and Changjiang Jinggong

0.84

Correlation Coefficient

Uroica Mining  Changjiang Jinggong

Very poor diversification

The 3 months correlation between Uroica and Changjiang is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Uroica Mining Safety and Changjiang Jinggong Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changjiang Jinggong Steel and Uroica Mining 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 Uroica Mining Safety are associated (or correlated) with Changjiang Jinggong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changjiang Jinggong Steel has no effect on the direction of Uroica Mining i.e., Uroica Mining and Changjiang Jinggong go up and down completely randomly.

Pair Corralation between Uroica Mining and Changjiang Jinggong

Assuming the 90 days trading horizon Uroica Mining Safety is expected to under-perform the Changjiang Jinggong. In addition to that, Uroica Mining is 1.81 times more volatile than Changjiang Jinggong Steel. It trades about -0.07 of its total potential returns per unit of risk. Changjiang Jinggong Steel is currently generating about -0.06 per unit of volatility. If you would invest  319.00  in Changjiang Jinggong Steel on December 1, 2024 and sell it today you would lose (19.00) from holding Changjiang Jinggong Steel or give up 5.96% of portfolio value over 90 days.

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

Uroica Mining Safety  vs.  Changjiang Jinggong Steel

Uroica Mining Safety

Risk-Adjusted Performance

Very Weak

Over the last 90 days Uroica Mining Safety 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.

Changjiang Jinggong Steel

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Uroica Mining and Changjiang Jinggong

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

The idea behind Uroica Mining Safety and Changjiang Jinggong Steel 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.