Correlation Between Anhui Tongguan and Chengtun Mining

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

By analyzing existing cross correlation between Anhui Tongguan Copper and Chengtun Mining Group, you can compare the effects of market volatilities on Anhui Tongguan 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 Anhui Tongguan with a short position of Chengtun Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Tongguan and Chengtun Mining.

Diversification Opportunities for Anhui Tongguan and Chengtun Mining

0.71

Correlation Coefficient

Anhui Tongguan  Chengtun Mining

Poor diversification

The 3 months correlation between Anhui and Chengtun is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Tongguan Copper 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 Anhui Tongguan 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 Anhui Tongguan Copper 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 Anhui Tongguan i.e., Anhui Tongguan and Chengtun Mining go up and down completely randomly.

Pair Corralation between Anhui Tongguan and Chengtun Mining

Assuming the 90 days trading horizon Anhui Tongguan Copper is expected to generate 1.1 times more return on investment than Chengtun Mining. However, Anhui Tongguan is 1.1 times more volatile than Chengtun Mining Group. It trades about 0.0 of its potential returns per unit of risk. Chengtun Mining Group is currently generating about 0.0 per unit of risk. If you would invest  1,254  in Anhui Tongguan Copper on October 4, 2024 and sell it today you would lose (146.00) from holding Anhui Tongguan Copper or give up 11.64% of portfolio value over 90 days.

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

Anhui Tongguan Copper  vs.  Chengtun Mining Group

Anhui Tongguan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Tongguan Copper 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.

Chengtun Mining Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 6 (%) 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 February 2025.

Pair Trading with Anhui Tongguan and Chengtun Mining

The main advantage of trading using opposite Anhui Tongguan and Chengtun Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Tongguan 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 Anhui Tongguan Copper 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.