Correlation Between Chengtun Mining and Xizi Clean

Can any of the company-specific risk be diversified away by investing in both Chengtun Mining and Xizi Clean 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 Xizi Clean 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 Xizi Clean Energy, you can compare the effects of market volatilities on Chengtun Mining and Xizi Clean 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 Xizi Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengtun Mining and Xizi Clean.

Diversification Opportunities for Chengtun Mining and Xizi Clean

0.67

Correlation Coefficient

Chengtun Mining  Xizi Clean

Poor diversification

The 3 months correlation between Chengtun and Xizi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Xizi Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xizi Clean Energy 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 Xizi Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xizi Clean Energy has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Xizi Clean go up and down completely randomly.

Pair Corralation between Chengtun Mining and Xizi Clean

Assuming the 90 days trading horizon Chengtun Mining Group is expected to generate 0.89 times more return on investment than Xizi Clean. However, Chengtun Mining Group is 1.12 times less risky than Xizi Clean. It trades about 0.21 of its potential returns per unit of risk. Xizi Clean Energy is currently generating about 0.14 per unit of risk. If you would invest  468.00  in Chengtun Mining Group on December 26, 2024 and sell it today you would earn a total of  134.00  from holding Chengtun Mining Group or generate 28.63% return on investment over 90 days.

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

Chengtun Mining Group  vs.  Xizi Clean Energy

Chengtun Mining Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Xizi Clean Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xizi Clean Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xizi Clean sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chengtun Mining and Xizi Clean

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

The idea behind Chengtun Mining Group and Xizi Clean Energy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.