Correlation Between Rising Nonferrous and East Money

Can any of the company-specific risk be diversified away by investing in both Rising Nonferrous and East Money 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 Rising Nonferrous and East Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rising Nonferrous Metals and East Money Information, you can compare the effects of market volatilities on Rising Nonferrous and East Money 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 Rising Nonferrous with a short position of East Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rising Nonferrous and East Money.

Diversification Opportunities for Rising Nonferrous and East Money

0.57

Correlation Coefficient

Rising Nonferrous  East Money

Very weak diversification

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

Pair Corralation between Rising Nonferrous and East Money

Assuming the 90 days trading horizon Rising Nonferrous Metals is expected to under-perform the East Money. But the stock apears to be less risky and, when comparing its historical volatility, Rising Nonferrous Metals is 1.37 times less risky than East Money. The stock trades about -0.02 of its potential returns per unit of risk. The East Money Information is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,931  in East Money Information on October 10, 2024 and sell it today you would earn a total of  370.00  from holding East Money Information or generate 19.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Rising Nonferrous Metals  vs.  East Money Information

Rising Nonferrous Metals

Risk-Adjusted Performance

2 of 100

Weak

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

East Money Information

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in East Money Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, East Money sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rising Nonferrous and East Money

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

The idea behind Rising Nonferrous Metals and East Money Information 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.