Correlation Between Chengtun Mining and Anhui Tongguan

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

Diversification Opportunities for Chengtun Mining and Anhui Tongguan

0.71

Correlation Coefficient

Chengtun Mining  Anhui Tongguan

Poor diversification

The 3 months correlation between Chengtun and Anhui is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Anhui Tongguan Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Tongguan Copper 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 Anhui Tongguan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Tongguan Copper has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Anhui Tongguan go up and down completely randomly.

Pair Corralation between Chengtun Mining and Anhui Tongguan

Assuming the 90 days trading horizon Chengtun Mining Group is expected to under-perform the Anhui Tongguan. But the stock apears to be less risky and, when comparing its historical volatility, Chengtun Mining Group is 1.1 times less risky than Anhui Tongguan. The stock trades about 0.0 of its potential returns per unit of risk. The Anhui Tongguan Copper is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,254  in Anhui Tongguan Copper on October 4, 2024 and sell it today you would lose (146.00) from holding Anhui Tongguan Copper or give up 11.64% of portfolio value over 90 days.

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

Chengtun Mining Group  vs.  Anhui Tongguan Copper

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.

Anhui Tongguan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Tongguan Copper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Chengtun Mining and Anhui Tongguan

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

The idea behind Chengtun Mining Group and Anhui Tongguan Copper 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.