Correlation Between Chengtun Mining and Jiugui Liquor

Can any of the company-specific risk be diversified away by investing in both Chengtun Mining and Jiugui Liquor 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 Chengtun Mining and Jiugui Liquor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chengtun Mining Group and Jiugui Liquor Co, you can compare the effects of market volatilities on Chengtun Mining and Jiugui Liquor 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 Chengtun Mining with a short position of Jiugui Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengtun Mining and Jiugui Liquor.

Diversification Opportunities for Chengtun Mining and Jiugui Liquor

0.63

Correlation Coefficient

Chengtun Mining  Jiugui Liquor

Poor diversification

The 3 months correlation between Chengtun and Jiugui is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Jiugui Liquor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiugui Liquor and Chengtun Mining 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 Chengtun Mining Group are associated (or correlated) with Jiugui Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiugui Liquor has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Jiugui Liquor go up and down completely randomly.

Pair Corralation between Chengtun Mining and Jiugui Liquor

Assuming the 90 days trading horizon Chengtun Mining Group is expected to generate 0.97 times more return on investment than Jiugui Liquor. However, Chengtun Mining Group is 1.03 times less risky than Jiugui Liquor. It trades about 0.0 of its potential returns per unit of risk. Jiugui Liquor Co is currently generating about -0.07 per unit of risk. If you would invest  594.00  in Chengtun Mining Group on October 4, 2024 and sell it today you would lose (102.00) from holding Chengtun Mining Group or give up 17.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Chengtun Mining Group  vs.  Jiugui Liquor Co

Chengtun Mining Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jiugui Liquor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiugui Liquor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiugui Liquor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chengtun Mining and Jiugui Liquor

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

The idea behind Chengtun Mining Group and Jiugui Liquor 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.