Correlation Between Guangzhou Haozhi and China Minmetals

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

By analyzing existing cross correlation between Guangzhou Haozhi Industrial and China Minmetals Rare, you can compare the effects of market volatilities on Guangzhou Haozhi and China Minmetals 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 Guangzhou Haozhi with a short position of China Minmetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Haozhi and China Minmetals.

Diversification Opportunities for Guangzhou Haozhi and China Minmetals

0.31

Correlation Coefficient

Guangzhou Haozhi  China Minmetals

Weak diversification

The 3 months correlation between Guangzhou and China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Haozhi Industrial and China Minmetals Rare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Minmetals Rare and Guangzhou Haozhi 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 Guangzhou Haozhi Industrial are associated (or correlated) with China Minmetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Minmetals Rare has no effect on the direction of Guangzhou Haozhi i.e., Guangzhou Haozhi and China Minmetals go up and down completely randomly.

Pair Corralation between Guangzhou Haozhi and China Minmetals

Assuming the 90 days trading horizon Guangzhou Haozhi Industrial is expected to generate 1.77 times more return on investment than China Minmetals. However, Guangzhou Haozhi is 1.77 times more volatile than China Minmetals Rare. It trades about 0.06 of its potential returns per unit of risk. China Minmetals Rare is currently generating about 0.0 per unit of risk. If you would invest  872.00  in Guangzhou Haozhi Industrial on October 10, 2024 and sell it today you would earn a total of  951.00  from holding Guangzhou Haozhi Industrial or generate 109.06% return on investment over 90 days.

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

Guangzhou Haozhi Industrial  vs.  China Minmetals Rare

Guangzhou Haozhi Ind

Risk-Adjusted Performance

5 of 100

Modest

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

China Minmetals Rare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Minmetals Rare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Minmetals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guangzhou Haozhi and China Minmetals

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

The idea behind Guangzhou Haozhi Industrial and China Minmetals Rare 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.