Correlation Between Metallurgical and Shandong Himile

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

By analyzing existing cross correlation between Metallurgical of and Shandong Himile Mechanical, you can compare the effects of market volatilities on Metallurgical and Shandong Himile 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 Shandong Himile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metallurgical and Shandong Himile.

Diversification Opportunities for Metallurgical and Shandong Himile

-0.76

Correlation Coefficient

Metallurgical  Shandong Himile

Pay attention - limited upside

The 3 months correlation between Metallurgical and Shandong is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Metallurgical of and Shandong Himile Mechanical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Himile Mech 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 Shandong Himile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Himile Mech has no effect on the direction of Metallurgical i.e., Metallurgical and Shandong Himile go up and down completely randomly.

Pair Corralation between Metallurgical and Shandong Himile

Assuming the 90 days trading horizon Metallurgical of is expected to under-perform the Shandong Himile. In addition to that, Metallurgical is 1.21 times more volatile than Shandong Himile Mechanical. It trades about -0.04 of its total potential returns per unit of risk. Shandong Himile Mechanical is currently generating about 0.09 per unit of volatility. If you would invest  4,791  in Shandong Himile Mechanical on October 20, 2024 and sell it today you would earn a total of  409.00  from holding Shandong Himile Mechanical or generate 8.54% return on investment over 90 days.

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

Metallurgical of  vs.  Shandong Himile Mechanical

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.

Shandong Himile Mech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Himile Mechanical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Himile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Metallurgical and Shandong Himile

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

The idea behind Metallurgical of and Shandong Himile Mechanical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..