Correlation Between Harbin Hatou and Shandong Gold

Can any of the company-specific risk be diversified away by investing in both Harbin Hatou and Shandong Gold 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 Harbin Hatou and Shandong Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harbin Hatou Investment and Shandong Gold Mining, you can compare the effects of market volatilities on Harbin Hatou and Shandong Gold 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 Harbin Hatou with a short position of Shandong Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbin Hatou and Shandong Gold.

Diversification Opportunities for Harbin Hatou and Shandong Gold

-0.69

Correlation Coefficient

Harbin Hatou  Shandong Gold

Excellent diversification

The 3 months correlation between Harbin and Shandong is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Harbin Hatou Investment and Shandong Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Gold Mining and Harbin Hatou 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 Harbin Hatou Investment are associated (or correlated) with Shandong Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Gold Mining has no effect on the direction of Harbin Hatou i.e., Harbin Hatou and Shandong Gold go up and down completely randomly.

Pair Corralation between Harbin Hatou and Shandong Gold

Assuming the 90 days trading horizon Harbin Hatou Investment is expected to generate 1.52 times more return on investment than Shandong Gold. However, Harbin Hatou is 1.52 times more volatile than Shandong Gold Mining. It trades about 0.05 of its potential returns per unit of risk. Shandong Gold Mining is currently generating about -0.01 per unit of risk. If you would invest  518.00  in Harbin Hatou Investment on October 4, 2024 and sell it today you would earn a total of  217.00  from holding Harbin Hatou Investment or generate 41.89% return on investment over 90 days.

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

Harbin Hatou Investment  vs.  Shandong Gold Mining

Harbin Hatou Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harbin Hatou Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harbin Hatou may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shandong Gold Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Gold Mining 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 Harbin Hatou and Shandong Gold

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

The idea behind Harbin Hatou Investment and Shandong Gold Mining 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.