Correlation Between Chengtun Mining and Huizhou Speed

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

Diversification Opportunities for Chengtun Mining and Huizhou Speed

0.18

Correlation Coefficient

Chengtun Mining  Huizhou Speed

Average diversification

The 3 months correlation between Chengtun and Huizhou is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Huizhou Speed Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huizhou Speed Wireless 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 Huizhou Speed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huizhou Speed Wireless has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Huizhou Speed go up and down completely randomly.

Pair Corralation between Chengtun Mining and Huizhou Speed

Assuming the 90 days trading horizon Chengtun Mining Group is expected to under-perform the Huizhou Speed. But the stock apears to be less risky and, when comparing its historical volatility, Chengtun Mining Group is 1.92 times less risky than Huizhou Speed. The stock trades about -0.01 of its potential returns per unit of risk. The Huizhou Speed Wireless is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  829.00  in Huizhou Speed Wireless on October 27, 2024 and sell it today you would earn a total of  488.00  from holding Huizhou Speed Wireless or generate 58.87% return on investment over 90 days.

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

Chengtun Mining Group  vs.  Huizhou Speed Wireless

Chengtun Mining Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Huizhou Speed Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huizhou Speed Wireless 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.

Pair Trading with Chengtun Mining and Huizhou Speed

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

The idea behind Chengtun Mining Group and Huizhou Speed Wireless 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.