Correlation Between Minmetals Capital and Tianjin Capital

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

Diversification Opportunities for Minmetals Capital and Tianjin Capital

0.91

Correlation Coefficient

Minmetals Capital  Tianjin Capital

Almost no diversification

The 3 months correlation between Minmetals and Tianjin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Tianjin Capital go up and down completely randomly.

Pair Corralation between Minmetals Capital and Tianjin Capital

Assuming the 90 days trading horizon Minmetals Capital Co is expected to under-perform the Tianjin Capital. In addition to that, Minmetals Capital is 1.7 times more volatile than Tianjin Capital Environmental. It trades about -0.19 of its total potential returns per unit of risk. Tianjin Capital Environmental is currently generating about -0.04 per unit of volatility. If you would invest  607.00  in Tianjin Capital Environmental on September 22, 2024 and sell it today you would lose (7.00) from holding Tianjin Capital Environmental or give up 1.15% of portfolio value over 90 days.

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

Minmetals Capital Co  vs.  Tianjin Capital Environmental

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.

Tianjin Capital Envi

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Minmetals Capital and Tianjin Capital

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

The idea behind Minmetals Capital Co and Tianjin Capital Environmental 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.