Correlation Between Minmetals Capital and Gem-Year Industrial

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

Diversification Opportunities for Minmetals Capital and Gem-Year Industrial

0.45

Correlation Coefficient

Minmetals Capital  Gem-Year Industrial

Very weak diversification

The 3 months correlation between Minmetals and Gem-Year is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Gem Year Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gem Year Industrial 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 Gem-Year Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gem Year Industrial has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Gem-Year Industrial go up and down completely randomly.

Pair Corralation between Minmetals Capital and Gem-Year Industrial

Assuming the 90 days trading horizon Minmetals Capital Co is expected to under-perform the Gem-Year Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Minmetals Capital Co is 1.24 times less risky than Gem-Year Industrial. The stock trades about -0.17 of its potential returns per unit of risk. The Gem Year Industrial Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  441.00  in Gem Year Industrial Co on November 30, 2024 and sell it today you would earn a total of  47.00  from holding Gem Year Industrial Co or generate 10.66% return on investment over 90 days.

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

Minmetals Capital Co  vs.  Gem Year Industrial Co

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

Gem Year Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem-Year Industrial may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Minmetals Capital and Gem-Year Industrial

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

The idea behind Minmetals Capital Co and Gem Year Industrial 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.