Correlation Between Minmetals Capital and Hunan Oil

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

Diversification Opportunities for Minmetals Capital and Hunan Oil

0.32

Correlation Coefficient

Minmetals Capital  Hunan Oil

Weak diversification

The 3 months correlation between Minmetals and Hunan is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Hunan Oil Pump in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Oil Pump 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 Hunan Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Oil Pump has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Hunan Oil go up and down completely randomly.

Pair Corralation between Minmetals Capital and Hunan Oil

Assuming the 90 days trading horizon Minmetals Capital Co is expected to generate 0.54 times more return on investment than Hunan Oil. However, Minmetals Capital Co is 1.86 times less risky than Hunan Oil. It trades about -0.35 of its potential returns per unit of risk. Hunan Oil Pump is currently generating about -0.27 per unit of risk. If you would invest  720.00  in Minmetals Capital Co on October 9, 2024 and sell it today you would lose (106.00) from holding Minmetals Capital Co or give up 14.72% of portfolio value over 90 days.

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

Minmetals Capital Co  vs.  Hunan Oil Pump

Minmetals Capital

Risk-Adjusted Performance

0 of 100

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

Hunan Oil Pump

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hunan Oil Pump are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hunan Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minmetals Capital and Hunan Oil

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

The idea behind Minmetals Capital Co and Hunan Oil Pump 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.

Check out your portfolio center.

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.