Correlation Between Metallurgical and Ningxia Xiaoming

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

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

Diversification Opportunities for Metallurgical and Ningxia Xiaoming

0.67

Correlation Coefficient

Metallurgical  Ningxia Xiaoming

Poor diversification

The 3 months correlation between Metallurgical and Ningxia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Metallurgical of and Ningxia Xiaoming Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Xiaoming Agr 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 Ningxia Xiaoming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Xiaoming Agr has no effect on the direction of Metallurgical i.e., Metallurgical and Ningxia Xiaoming go up and down completely randomly.

Pair Corralation between Metallurgical and Ningxia Xiaoming

Assuming the 90 days trading horizon Metallurgical of is expected to under-perform the Ningxia Xiaoming. But the stock apears to be less risky and, when comparing its historical volatility, Metallurgical of is 1.92 times less risky than Ningxia Xiaoming. The stock trades about -0.01 of its potential returns per unit of risk. The Ningxia Xiaoming Agriculture is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  984.00  in Ningxia Xiaoming Agriculture on October 8, 2024 and sell it today you would earn a total of  104.00  from holding Ningxia Xiaoming Agriculture or generate 10.57% return on investment over 90 days.

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

Metallurgical of  vs.  Ningxia Xiaoming Agriculture

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 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.

Ningxia Xiaoming Agr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningxia Xiaoming Agriculture 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.

Pair Trading with Metallurgical and Ningxia Xiaoming

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

The idea behind Metallurgical of and Ningxia Xiaoming Agriculture 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.