Correlation Between Minmetals Capital and Changchun High

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

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

Diversification Opportunities for Minmetals Capital and Changchun High

0.93

Correlation Coefficient

Minmetals Capital  Changchun High

Almost no diversification

The 3 months correlation between Minmetals and Changchun is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Changchun High New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun High New and Minmetals Capital 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 Minmetals Capital Co are associated (or correlated) with Changchun High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun High New has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Changchun High go up and down completely randomly.

Pair Corralation between Minmetals Capital and Changchun High

Assuming the 90 days trading horizon Minmetals Capital Co is expected to generate 1.06 times more return on investment than Changchun High. However, Minmetals Capital is 1.06 times more volatile than Changchun High New. It trades about 0.04 of its potential returns per unit of risk. Changchun High New is currently generating about -0.04 per unit of risk. If you would invest  511.00  in Minmetals Capital Co on September 22, 2024 and sell it today you would earn a total of  179.00  from holding Minmetals Capital Co or generate 35.03% return on investment over 90 days.

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

Minmetals Capital Co  vs.  Changchun High New

Minmetals Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Minmetals Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Changchun High New

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Changchun High New are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changchun High sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minmetals Capital and Changchun High

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

The idea behind Minmetals Capital Co and Changchun High New 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.