Correlation Between Tibet Huayu and Sailun Jinyu

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Can any of the company-specific risk be diversified away by investing in both Tibet Huayu and Sailun Jinyu 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 Tibet Huayu and Sailun Jinyu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tibet Huayu Mining and Sailun Jinyu Group, you can compare the effects of market volatilities on Tibet Huayu and Sailun Jinyu 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 Tibet Huayu with a short position of Sailun Jinyu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tibet Huayu and Sailun Jinyu.

Diversification Opportunities for Tibet Huayu and Sailun Jinyu

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tibet and Sailun is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tibet Huayu Mining and Sailun Jinyu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sailun Jinyu Group and Tibet Huayu 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 Tibet Huayu Mining are associated (or correlated) with Sailun Jinyu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sailun Jinyu Group has no effect on the direction of Tibet Huayu i.e., Tibet Huayu and Sailun Jinyu go up and down completely randomly.

Pair Corralation between Tibet Huayu and Sailun Jinyu

Assuming the 90 days trading horizon Tibet Huayu Mining is expected to generate 1.66 times more return on investment than Sailun Jinyu. However, Tibet Huayu is 1.66 times more volatile than Sailun Jinyu Group. It trades about 0.04 of its potential returns per unit of risk. Sailun Jinyu Group is currently generating about 0.02 per unit of risk. If you would invest  1,244  in Tibet Huayu Mining on September 23, 2024 and sell it today you would earn a total of  133.00  from holding Tibet Huayu Mining or generate 10.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tibet Huayu Mining  vs.  Sailun Jinyu Group

 Performance 
       Timeline  
Tibet Huayu Mining 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tibet Huayu Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tibet Huayu sustained solid returns over the last few months and may actually be approaching a breakup point.
Sailun Jinyu Group 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sailun Jinyu Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sailun Jinyu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tibet Huayu and Sailun Jinyu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tibet Huayu and Sailun Jinyu

The main advantage of trading using opposite Tibet Huayu and Sailun Jinyu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tibet Huayu position performs unexpectedly, Sailun Jinyu 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 Sailun Jinyu will offset losses from the drop in Sailun Jinyu's long position.
The idea behind Tibet Huayu Mining and Sailun Jinyu Group 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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