Correlation Between Gansu Jiu and Minmetals Capital

Can any of the company-specific risk be diversified away by investing in both Gansu Jiu and Minmetals Capital 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 Gansu Jiu and Minmetals Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gansu Jiu Steel and Minmetals Capital Co, you can compare the effects of market volatilities on Gansu Jiu and Minmetals Capital 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 Gansu Jiu with a short position of Minmetals Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Jiu and Minmetals Capital.

Diversification Opportunities for Gansu Jiu and Minmetals Capital

0.59

Correlation Coefficient

Gansu Jiu  Minmetals Capital

Very weak diversification

The 3 months correlation between Gansu and Minmetals is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Jiu Steel and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital and Gansu Jiu 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 Gansu Jiu Steel are associated (or correlated) with Minmetals Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minmetals Capital has no effect on the direction of Gansu Jiu i.e., Gansu Jiu and Minmetals Capital go up and down completely randomly.

Pair Corralation between Gansu Jiu and Minmetals Capital

Assuming the 90 days trading horizon Gansu Jiu Steel is expected to under-perform the Minmetals Capital. But the stock apears to be less risky and, when comparing its historical volatility, Gansu Jiu Steel is 1.24 times less risky than Minmetals Capital. The stock trades about 0.0 of its potential returns per unit of risk. The Minmetals Capital Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  536.00  in Minmetals Capital Co on October 9, 2024 and sell it today you would earn a total of  67.00  from holding Minmetals Capital Co or generate 12.5% return on investment over 90 days.

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

Gansu Jiu Steel  vs.  Minmetals Capital Co

Gansu Jiu Steel

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Jiu Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Jiu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Minmetals Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minmetals Capital Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gansu Jiu and Minmetals Capital

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

The idea behind Gansu Jiu Steel and Minmetals Capital Co 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.