Correlation Between GREENX METALS and China Energy

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

By analyzing existing cross correlation between GREENX METALS LTD and China Energy Engineering, you can compare the effects of market volatilities on GREENX METALS and China Energy 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 GREENX METALS with a short position of China Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENX METALS and China Energy.

Diversification Opportunities for GREENX METALS and China Energy

-0.12

Correlation Coefficient

GREENX METALS  China Energy

Good diversification

The 3 months correlation between GREENX and China is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding GREENX METALS LTD and China Energy Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Energy Engineering and GREENX METALS 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 GREENX METALS LTD are associated (or correlated) with China Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Energy Engineering has no effect on the direction of GREENX METALS i.e., GREENX METALS and China Energy go up and down completely randomly.

Pair Corralation between GREENX METALS and China Energy

Assuming the 90 days trading horizon GREENX METALS is expected to generate 1.44 times less return on investment than China Energy. But when comparing it to its historical volatility, GREENX METALS LTD is 1.22 times less risky than China Energy. It trades about 0.02 of its potential returns per unit of risk. China Energy Engineering is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11.00  in China Energy Engineering on October 11, 2024 and sell it today you would earn a total of  0.00  from holding China Energy Engineering or generate 0.0% return on investment over 90 days.

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

GREENX METALS LTD  vs.  China Energy Engineering

GREENX METALS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENX METALS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, GREENX METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

China Energy Engineering

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Energy Engineering are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GREENX METALS and China Energy

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

The idea behind GREENX METALS LTD and China Energy Engineering 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.