Correlation Between Minmetals Capital and Sichuan Hebang

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

Diversification Opportunities for Minmetals Capital and Sichuan Hebang

0.81

Correlation Coefficient

Minmetals Capital  Sichuan Hebang

Very poor diversification

The 3 months correlation between Minmetals and Sichuan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Sichuan Hebang Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Hebang Biote 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 Sichuan Hebang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Hebang Biote has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Sichuan Hebang go up and down completely randomly.

Pair Corralation between Minmetals Capital and Sichuan Hebang

Assuming the 90 days trading horizon Minmetals Capital Co is expected to under-perform the Sichuan Hebang. In addition to that, Minmetals Capital is 1.03 times more volatile than Sichuan Hebang Biotechnology. It trades about -0.18 of its total potential returns per unit of risk. Sichuan Hebang Biotechnology is currently generating about -0.11 per unit of volatility. If you would invest  213.00  in Sichuan Hebang Biotechnology on December 5, 2024 and sell it today you would lose (26.00) from holding Sichuan Hebang Biotechnology or give up 12.21% of portfolio value over 90 days.

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

Minmetals Capital Co  vs.  Sichuan Hebang Biotechnology

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.

Sichuan Hebang Biote

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sichuan Hebang Biotechnology 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 Sichuan Hebang

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

The idea behind Minmetals Capital Co and Sichuan Hebang Biotechnology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.