Correlation Between Gem Year and Minmetals Capital

Can any of the company-specific risk be diversified away by investing in both Gem Year and Minmetals Capital 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 Gem Year and Minmetals Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gem Year Industrial Co and Minmetals Capital Co, you can compare the effects of market volatilities on Gem Year and Minmetals Capital 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 Gem Year with a short position of Minmetals Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Year and Minmetals Capital.

Diversification Opportunities for Gem Year and Minmetals Capital

0.91

Correlation Coefficient

Gem Year  Minmetals Capital

Almost no diversification

The 3 months correlation between Gem and Minmetals is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital and Gem Year 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 Gem Year Industrial Co are associated (or correlated) with Minmetals Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minmetals Capital has no effect on the direction of Gem Year i.e., Gem Year and Minmetals Capital go up and down completely randomly.

Pair Corralation between Gem Year and Minmetals Capital

Assuming the 90 days trading horizon Gem Year is expected to generate 1.48 times less return on investment than Minmetals Capital. But when comparing it to its historical volatility, Gem Year Industrial Co is 1.53 times less risky than Minmetals Capital. It trades about 0.24 of its potential returns per unit of risk. Minmetals Capital Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  403.00  in Minmetals Capital Co on September 3, 2024 and sell it today you would earn a total of  316.00  from holding Minmetals Capital Co or generate 78.41% return on investment over 90 days.

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

Gem Year Industrial Co  vs.  Minmetals Capital Co

Gem Year Industrial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem Year sustained solid returns over the last few months and may actually be approaching a breakup point.

Minmetals Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Minmetals Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gem Year and Minmetals Capital

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

The idea behind Gem Year Industrial Co and Minmetals Capital 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.