Correlation Between Metallurgical and Anhui Tongguan

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

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

Diversification Opportunities for Metallurgical and Anhui Tongguan

0.94

Correlation Coefficient

Metallurgical  Anhui Tongguan

Almost no diversification

The 3 months correlation between Metallurgical and Anhui is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Metallurgical of and Anhui Tongguan Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Tongguan Copper 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 Anhui Tongguan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Tongguan Copper has no effect on the direction of Metallurgical i.e., Metallurgical and Anhui Tongguan go up and down completely randomly.

Pair Corralation between Metallurgical and Anhui Tongguan

Assuming the 90 days trading horizon Metallurgical of is expected to generate 0.71 times more return on investment than Anhui Tongguan. However, Metallurgical of is 1.4 times less risky than Anhui Tongguan. It trades about -0.08 of its potential returns per unit of risk. Anhui Tongguan Copper is currently generating about -0.14 per unit of risk. If you would invest  347.00  in Metallurgical of on September 20, 2024 and sell it today you would lose (9.00) from holding Metallurgical of or give up 2.59% of portfolio value over 90 days.

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

Metallurgical of  vs.  Anhui Tongguan Copper

Metallurgical

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metallurgical of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metallurgical sustained solid returns over the last few months and may actually be approaching a breakup point.

Anhui Tongguan Copper

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Tongguan Copper are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Tongguan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metallurgical and Anhui Tongguan

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

The idea behind Metallurgical of and Anhui Tongguan Copper 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.