Correlation Between HengFeng Information and Uroica Mining

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

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

Diversification Opportunities for HengFeng Information and Uroica Mining

0.86

Correlation Coefficient

HengFeng Information  Uroica Mining

Very poor diversification

The 3 months correlation between HengFeng and Uroica is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding HengFeng Information Technolog and Uroica Mining Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uroica Mining Safety and HengFeng Information 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 HengFeng Information Technology are associated (or correlated) with Uroica Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uroica Mining Safety has no effect on the direction of HengFeng Information i.e., HengFeng Information and Uroica Mining go up and down completely randomly.

Pair Corralation between HengFeng Information and Uroica Mining

Assuming the 90 days trading horizon HengFeng Information Technology is expected to under-perform the Uroica Mining. In addition to that, HengFeng Information is 1.1 times more volatile than Uroica Mining Safety. It trades about -0.02 of its total potential returns per unit of risk. Uroica Mining Safety is currently generating about 0.03 per unit of volatility. If you would invest  559.00  in Uroica Mining Safety on October 11, 2024 and sell it today you would earn a total of  19.00  from holding Uroica Mining Safety or generate 3.4% return on investment over 90 days.

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

HengFeng Information Technolog  vs.  Uroica Mining Safety

HengFeng Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Uroica Mining Safety

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uroica Mining Safety are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Uroica Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HengFeng Information and Uroica Mining

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

The idea behind HengFeng Information Technology and Uroica Mining Safety 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.