Correlation Between Minmetals Capital and Shenzhen

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

Diversification Opportunities for Minmetals Capital and Shenzhen

0.86

Correlation Coefficient

Minmetals Capital  Shenzhen

Very poor diversification

The 3 months correlation between Minmetals and Shenzhen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Shenzhen AV Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen AV Display 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 Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen AV Display has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Shenzhen go up and down completely randomly.

Pair Corralation between Minmetals Capital and Shenzhen

Assuming the 90 days trading horizon Minmetals Capital Co is expected to generate 1.13 times more return on investment than Shenzhen. However, Minmetals Capital is 1.13 times more volatile than Shenzhen AV Display Co. It trades about 0.23 of its potential returns per unit of risk. Shenzhen AV Display Co is currently generating about 0.11 per unit of risk. If you would invest  403.00  in Minmetals Capital Co on September 3, 2024 and sell it today you would earn a total of  316.00  from holding Minmetals Capital Co or generate 78.41% return on investment over 90 days.

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

Minmetals Capital Co  vs.  Shenzhen AV Display Co

Minmetals Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 17 (%) 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.

Shenzhen AV Display

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen AV Display Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minmetals Capital and Shenzhen

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

The idea behind Minmetals Capital Co and Shenzhen AV Display 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..