Correlation Between CIMC Vehicles and Huaibei Mining

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

By analyzing existing cross correlation between CIMC Vehicles Co and Huaibei Mining Holdings, you can compare the effects of market volatilities on CIMC Vehicles and Huaibei 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 CIMC Vehicles with a short position of Huaibei Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMC Vehicles and Huaibei Mining.

Diversification Opportunities for CIMC Vehicles and Huaibei Mining

0.57

Correlation Coefficient

CIMC Vehicles  Huaibei Mining

Very weak diversification

The 3 months correlation between CIMC and Huaibei is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CIMC Vehicles Co and Huaibei Mining Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaibei Mining Holdings and CIMC Vehicles 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 CIMC Vehicles Co are associated (or correlated) with Huaibei Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaibei Mining Holdings has no effect on the direction of CIMC Vehicles i.e., CIMC Vehicles and Huaibei Mining go up and down completely randomly.

Pair Corralation between CIMC Vehicles and Huaibei Mining

Assuming the 90 days trading horizon CIMC Vehicles Co is expected to generate 1.02 times more return on investment than Huaibei Mining. However, CIMC Vehicles is 1.02 times more volatile than Huaibei Mining Holdings. It trades about -0.08 of its potential returns per unit of risk. Huaibei Mining Holdings is currently generating about -0.19 per unit of risk. If you would invest  980.00  in CIMC Vehicles Co on September 26, 2024 and sell it today you would lose (27.00) from holding CIMC Vehicles Co or give up 2.76% of portfolio value over 90 days.

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

CIMC Vehicles Co  vs.  Huaibei Mining Holdings

CIMC Vehicles

Risk-Adjusted Performance

2 of 100

Weak

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

Huaibei Mining Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaibei Mining Holdings 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CIMC Vehicles and Huaibei Mining

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

The idea behind CIMC Vehicles Co and Huaibei Mining Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.