Correlation Between Metallurgical and Changchun High

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

By analyzing existing cross correlation between Metallurgical of and Changchun High New, you can compare the effects of market volatilities on Metallurgical and Changchun High 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 Metallurgical with a short position of Changchun High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metallurgical and Changchun High.

Diversification Opportunities for Metallurgical and Changchun High

0.87

Correlation Coefficient

Metallurgical  Changchun High

Very poor diversification

The 3 months correlation between Metallurgical and Changchun is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Metallurgical of and Changchun High New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun High New and Metallurgical 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 Metallurgical of are associated (or correlated) with Changchun High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun High New has no effect on the direction of Metallurgical i.e., Metallurgical and Changchun High go up and down completely randomly.

Pair Corralation between Metallurgical and Changchun High

Assuming the 90 days trading horizon Metallurgical of is expected to generate 0.98 times more return on investment than Changchun High. However, Metallurgical of is 1.02 times less risky than Changchun High. It trades about -0.05 of its potential returns per unit of risk. Changchun High New is currently generating about -0.32 per unit of risk. If you would invest  339.00  in Metallurgical of on October 1, 2024 and sell it today you would lose (4.00) from holding Metallurgical of or give up 1.18% of portfolio value over 90 days.

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

Metallurgical of  vs.  Changchun High New

Metallurgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metallurgical of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Metallurgical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Changchun High New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changchun High New 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Metallurgical and Changchun High

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

The idea behind Metallurgical of and Changchun High New 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.