Correlation Between China Mobile and Jinduicheng Molybdenum

Can any of the company-specific risk be diversified away by investing in both China Mobile and Jinduicheng Molybdenum 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 China Mobile and Jinduicheng Molybdenum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Mobile Limited and Jinduicheng Molybdenum Co, you can compare the effects of market volatilities on China Mobile and Jinduicheng Molybdenum 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 China Mobile with a short position of Jinduicheng Molybdenum. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and Jinduicheng Molybdenum.

Diversification Opportunities for China Mobile and Jinduicheng Molybdenum

-0.59

Correlation Coefficient

China Mobile  Jinduicheng Molybdenum

Excellent diversification

The 3 months correlation between China and Jinduicheng is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited and Jinduicheng Molybdenum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinduicheng Molybdenum and China Mobile 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 China Mobile Limited are associated (or correlated) with Jinduicheng Molybdenum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinduicheng Molybdenum has no effect on the direction of China Mobile i.e., China Mobile and Jinduicheng Molybdenum go up and down completely randomly.

Pair Corralation between China Mobile and Jinduicheng Molybdenum

Assuming the 90 days trading horizon China Mobile Limited is expected to under-perform the Jinduicheng Molybdenum. But the stock apears to be less risky and, when comparing its historical volatility, China Mobile Limited is 1.04 times less risky than Jinduicheng Molybdenum. The stock trades about -0.1 of its potential returns per unit of risk. The Jinduicheng Molybdenum Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,035  in Jinduicheng Molybdenum Co on December 26, 2024 and sell it today you would earn a total of  52.00  from holding Jinduicheng Molybdenum Co or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

China Mobile Limited  vs.  Jinduicheng Molybdenum Co

China Mobile Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Mobile Limited 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.

Jinduicheng Molybdenum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinduicheng Molybdenum Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jinduicheng Molybdenum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Mobile and Jinduicheng Molybdenum

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

The idea behind China Mobile Limited and Jinduicheng Molybdenum Co 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.