Correlation Between Minmetals Capital and Jiangxi Ganfeng

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

Diversification Opportunities for Minmetals Capital and Jiangxi Ganfeng

0.76

Correlation Coefficient

Minmetals Capital  Jiangxi Ganfeng

Poor diversification

The 3 months correlation between Minmetals and Jiangxi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Jiangxi Ganfeng Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Ganfeng Lithium 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 Jiangxi Ganfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Ganfeng Lithium has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Jiangxi Ganfeng go up and down completely randomly.

Pair Corralation between Minmetals Capital and Jiangxi Ganfeng

Assuming the 90 days trading horizon Minmetals Capital Co is expected to generate 0.9 times more return on investment than Jiangxi Ganfeng. However, Minmetals Capital Co is 1.11 times less risky than Jiangxi Ganfeng. It trades about 0.06 of its potential returns per unit of risk. Jiangxi Ganfeng Lithium is currently generating about 0.01 per unit of risk. If you would invest  494.00  in Minmetals Capital Co on September 22, 2024 and sell it today you would earn a total of  196.00  from holding Minmetals Capital Co or generate 39.68% return on investment over 90 days.

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

Minmetals Capital Co  vs.  Jiangxi Ganfeng Lithium

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.

Jiangxi Ganfeng Lithium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Ganfeng Lithium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Ganfeng sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minmetals Capital and Jiangxi Ganfeng

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

The idea behind Minmetals Capital Co and Jiangxi Ganfeng Lithium 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.