Correlation Between Min Aik and China Metal

Can any of the company-specific risk be diversified away by investing in both Min Aik and China Metal 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 Min Aik and China Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Min Aik Technology and China Metal Products, you can compare the effects of market volatilities on Min Aik and China Metal 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 Min Aik with a short position of China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and China Metal.

Diversification Opportunities for Min Aik and China Metal

0.71

Correlation Coefficient

Min Aik  China Metal

Poor diversification

The 3 months correlation between Min and China is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products and Min Aik 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 Min Aik Technology are associated (or correlated) with China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of Min Aik i.e., Min Aik and China Metal go up and down completely randomly.

Pair Corralation between Min Aik and China Metal

Assuming the 90 days trading horizon Min Aik Technology is expected to generate 1.43 times more return on investment than China Metal. However, Min Aik is 1.43 times more volatile than China Metal Products. It trades about -0.07 of its potential returns per unit of risk. China Metal Products is currently generating about -0.16 per unit of risk. If you would invest  2,585  in Min Aik Technology on September 16, 2024 and sell it today you would lose (300.00) from holding Min Aik Technology or give up 11.61% of portfolio value over 90 days.

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

Min Aik Technology  vs.  China Metal Products

Min Aik Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Min Aik Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

China Metal Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Metal Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Min Aik and China Metal

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

The idea behind Min Aik Technology and China Metal Products 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.