Correlation Between Minmetals Capital and Luolai Home

Can any of the company-specific risk be diversified away by investing in both Minmetals Capital and Luolai Home 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 Luolai Home 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 Luolai Home Textile, you can compare the effects of market volatilities on Minmetals Capital and Luolai Home 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 Luolai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minmetals Capital and Luolai Home.

Diversification Opportunities for Minmetals Capital and Luolai Home

0.65

Correlation Coefficient

Minmetals Capital  Luolai Home

Poor diversification

The 3 months correlation between Minmetals and Luolai is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Luolai Home Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luolai Home Textile 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 Luolai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luolai Home Textile has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Luolai Home go up and down completely randomly.

Pair Corralation between Minmetals Capital and Luolai Home

Assuming the 90 days trading horizon Minmetals Capital Co is expected to under-perform the Luolai Home. In addition to that, Minmetals Capital is 1.02 times more volatile than Luolai Home Textile. It trades about -0.17 of its total potential returns per unit of risk. Luolai Home Textile is currently generating about -0.11 per unit of volatility. If you would invest  867.00  in Luolai Home Textile on December 2, 2024 and sell it today you would lose (107.00) from holding Luolai Home Textile or give up 12.34% of portfolio value over 90 days.

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

Minmetals Capital Co  vs.  Luolai Home Textile

Minmetals Capital

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Luolai Home Textile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Luolai Home Textile 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Minmetals Capital and Luolai Home

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

The idea behind Minmetals Capital Co and Luolai Home Textile 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.