Correlation Between Aluminum Corp and Inner Mongolia

Can any of the company-specific risk be diversified away by investing in both Aluminum Corp and Inner Mongolia 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 Aluminum Corp and Inner Mongolia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aluminum Corp of and Inner Mongolia Junzheng, you can compare the effects of market volatilities on Aluminum Corp and Inner Mongolia 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 Aluminum Corp with a short position of Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminum Corp and Inner Mongolia.

Diversification Opportunities for Aluminum Corp and Inner Mongolia

-0.29

Correlation Coefficient

Aluminum Corp  Inner Mongolia

Very good diversification

The 3 months correlation between Aluminum and Inner is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum Corp of and Inner Mongolia Junzheng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Junzheng and Aluminum Corp 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 Aluminum Corp of are associated (or correlated) with Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Junzheng has no effect on the direction of Aluminum Corp i.e., Aluminum Corp and Inner Mongolia go up and down completely randomly.

Pair Corralation between Aluminum Corp and Inner Mongolia

Assuming the 90 days trading horizon Aluminum Corp of is expected to generate 1.04 times more return on investment than Inner Mongolia. However, Aluminum Corp is 1.04 times more volatile than Inner Mongolia Junzheng. It trades about 0.04 of its potential returns per unit of risk. Inner Mongolia Junzheng is currently generating about 0.03 per unit of risk. If you would invest  532.00  in Aluminum Corp of on October 25, 2024 and sell it today you would earn a total of  237.00  from holding Aluminum Corp of or generate 44.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Aluminum Corp of  vs.  Inner Mongolia Junzheng

Aluminum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum Corp of 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.

Inner Mongolia Junzheng

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inner Mongolia Junzheng are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inner Mongolia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aluminum Corp and Inner Mongolia

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

The idea behind Aluminum Corp of and Inner Mongolia Junzheng 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.