Correlation Between Malion New and Chengtun Mining

Can any of the company-specific risk be diversified away by investing in both Malion New and Chengtun 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 Malion New and Chengtun Mining 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 Chengtun Mining Group, you can compare the effects of market volatilities on Malion New and Chengtun 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 Malion New with a short position of Chengtun Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malion New and Chengtun Mining.

Diversification Opportunities for Malion New and Chengtun Mining

0.65

Correlation Coefficient

Malion New  Chengtun Mining

Poor diversification

The 3 months correlation between Malion and Chengtun is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Malion New Materials and Chengtun Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengtun Mining Group 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 Chengtun Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengtun Mining Group has no effect on the direction of Malion New i.e., Malion New and Chengtun Mining go up and down completely randomly.

Pair Corralation between Malion New and Chengtun Mining

Assuming the 90 days trading horizon Malion New Materials is expected to under-perform the Chengtun Mining. In addition to that, Malion New is 1.32 times more volatile than Chengtun Mining Group. It trades about -0.02 of its total potential returns per unit of risk. Chengtun Mining Group is currently generating about -0.01 per unit of volatility. If you would invest  605.00  in Chengtun Mining Group on September 29, 2024 and sell it today you would lose (124.00) from holding Chengtun Mining Group or give up 20.5% of portfolio value over 90 days.

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

Malion New Materials  vs.  Chengtun Mining Group

Malion New Materials

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malion New Materials are ranked lower than 4 (%) 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.

Chengtun Mining Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Malion New and Chengtun Mining

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

The idea behind Malion New Materials and Chengtun Mining Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.