Correlation Between Aba Chemicals and China Minsheng

Can any of the company-specific risk be diversified away by investing in both Aba Chemicals and China Minsheng 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 Aba Chemicals and China Minsheng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aba Chemicals Corp and China Minsheng Banking, you can compare the effects of market volatilities on Aba Chemicals and China Minsheng 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 Aba Chemicals with a short position of China Minsheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aba Chemicals and China Minsheng.

Diversification Opportunities for Aba Chemicals and China Minsheng

-0.45

Correlation Coefficient

Aba Chemicals  China Minsheng

Very good diversification

The 3 months correlation between Aba and China is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aba Chemicals Corp and China Minsheng Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Minsheng Banking and Aba Chemicals 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 Aba Chemicals Corp are associated (or correlated) with China Minsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Minsheng Banking has no effect on the direction of Aba Chemicals i.e., Aba Chemicals and China Minsheng go up and down completely randomly.

Pair Corralation between Aba Chemicals and China Minsheng

Assuming the 90 days trading horizon Aba Chemicals Corp is expected to under-perform the China Minsheng. In addition to that, Aba Chemicals is 2.82 times more volatile than China Minsheng Banking. It trades about 0.0 of its total potential returns per unit of risk. China Minsheng Banking is currently generating about 0.02 per unit of volatility. If you would invest  380.00  in China Minsheng Banking on October 24, 2024 and sell it today you would earn a total of  28.00  from holding China Minsheng Banking or generate 7.37% return on investment over 90 days.

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

Aba Chemicals Corp  vs.  China Minsheng Banking

Aba Chemicals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aba Chemicals Corp 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.

China Minsheng Banking

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Minsheng Banking are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Minsheng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aba Chemicals and China Minsheng

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

The idea behind Aba Chemicals Corp and China Minsheng Banking 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.