Correlation Between Rising Nonferrous and State Grid

Can any of the company-specific risk be diversified away by investing in both Rising Nonferrous and State Grid 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 State Grid 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 State Grid InformationCommunication, you can compare the effects of market volatilities on Rising Nonferrous and State Grid 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 State Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rising Nonferrous and State Grid.

Diversification Opportunities for Rising Nonferrous and State Grid

0.78

Correlation Coefficient

Rising Nonferrous  State Grid

Poor diversification

The 3 months correlation between Rising and State is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rising Nonferrous Metals and State Grid InformationCommunic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Grid Informati 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 State Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Grid Informati has no effect on the direction of Rising Nonferrous i.e., Rising Nonferrous and State Grid go up and down completely randomly.

Pair Corralation between Rising Nonferrous and State Grid

Assuming the 90 days trading horizon Rising Nonferrous Metals is expected to generate 0.9 times more return on investment than State Grid. However, Rising Nonferrous Metals is 1.11 times less risky than State Grid. It trades about 0.06 of its potential returns per unit of risk. State Grid InformationCommunication is currently generating about 0.01 per unit of risk. If you would invest  2,740  in Rising Nonferrous Metals on October 15, 2024 and sell it today you would earn a total of  244.00  from holding Rising Nonferrous Metals or generate 8.91% return on investment over 90 days.

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

Rising Nonferrous Metals  vs.  State Grid InformationCommunic

Rising Nonferrous Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Nonferrous Metals are ranked lower than 4 (%) 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.

State Grid Informati

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Grid InformationCommunication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, State Grid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rising Nonferrous and State Grid

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

The idea behind Rising Nonferrous Metals and State Grid InformationCommunication 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 Transaction History module to view history of all your transactions and understand their impact on performance.