Correlation Between Malion New and Sichuan Tianqi

Can any of the company-specific risk be diversified away by investing in both Malion New and Sichuan Tianqi 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 Malion New and Sichuan Tianqi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Malion New Materials and Sichuan Tianqi Lithium, you can compare the effects of market volatilities on Malion New and Sichuan Tianqi 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 Malion New with a short position of Sichuan Tianqi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malion New and Sichuan Tianqi.

Diversification Opportunities for Malion New and Sichuan Tianqi

0.41

Correlation Coefficient

Malion New  Sichuan Tianqi

Very weak diversification

The 3 months correlation between Malion and Sichuan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Malion New Materials and Sichuan Tianqi Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Tianqi Lithium and Malion New 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 Malion New Materials are associated (or correlated) with Sichuan Tianqi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Tianqi Lithium has no effect on the direction of Malion New i.e., Malion New and Sichuan Tianqi go up and down completely randomly.

Pair Corralation between Malion New and Sichuan Tianqi

Assuming the 90 days trading horizon Malion New Materials is expected to generate 1.1 times more return on investment than Sichuan Tianqi. However, Malion New is 1.1 times more volatile than Sichuan Tianqi Lithium. It trades about 0.09 of its potential returns per unit of risk. Sichuan Tianqi Lithium is currently generating about -0.06 per unit of risk. If you would invest  840.00  in Malion New Materials on December 26, 2024 and sell it today you would earn a total of  92.00  from holding Malion New Materials or generate 10.95% return on investment over 90 days.

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

Malion New Materials  vs.  Sichuan Tianqi Lithium

Malion New Materials

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Malion New Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malion New sustained solid returns over the last few months and may actually be approaching a breakup point.

Sichuan Tianqi Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sichuan Tianqi Lithium 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 Malion New and Sichuan Tianqi

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

The idea behind Malion New Materials and Sichuan Tianqi Lithium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.