Correlation Between Chengtun Mining and Anhui Jianghuai

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

Diversification Opportunities for Chengtun Mining and Anhui Jianghuai

-0.48

Correlation Coefficient

Chengtun Mining  Anhui Jianghuai

Very good diversification

The 3 months correlation between Chengtun and Anhui is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto 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 Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Anhui Jianghuai go up and down completely randomly.

Pair Corralation between Chengtun Mining and Anhui Jianghuai

Assuming the 90 days trading horizon Chengtun Mining Group is expected to generate 0.82 times more return on investment than Anhui Jianghuai. However, Chengtun Mining Group is 1.22 times less risky than Anhui Jianghuai. It trades about 0.24 of its potential returns per unit of risk. Anhui Jianghuai Automobile is currently generating about -0.11 per unit of risk. If you would invest  466.00  in Chengtun Mining Group on December 25, 2024 and sell it today you would earn a total of  151.00  from holding Chengtun Mining Group or generate 32.4% return on investment over 90 days.

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

Chengtun Mining Group  vs.  Anhui Jianghuai Automobile

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 18 (%) 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.

Anhui Jianghuai Auto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Jianghuai Automobile 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chengtun Mining and Anhui Jianghuai

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

The idea behind Chengtun Mining Group and Anhui Jianghuai Automobile 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.