Correlation Between Hainan Mining and Bosera CMSK

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

By analyzing existing cross correlation between Hainan Mining Co and Bosera CMSK Industrial, you can compare the effects of market volatilities on Hainan Mining and Bosera CMSK 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 Hainan Mining with a short position of Bosera CMSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Mining and Bosera CMSK.

Diversification Opportunities for Hainan Mining and Bosera CMSK

0.2

Correlation Coefficient

Hainan Mining  Bosera CMSK

Modest diversification

The 3 months correlation between Hainan and Bosera is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Mining Co and Bosera CMSK Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosera CMSK Industrial and Hainan Mining 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 Hainan Mining Co are associated (or correlated) with Bosera CMSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosera CMSK Industrial has no effect on the direction of Hainan Mining i.e., Hainan Mining and Bosera CMSK go up and down completely randomly.

Pair Corralation between Hainan Mining and Bosera CMSK

Assuming the 90 days trading horizon Hainan Mining Co is expected to under-perform the Bosera CMSK. In addition to that, Hainan Mining is 3.69 times more volatile than Bosera CMSK Industrial. It trades about -0.03 of its total potential returns per unit of risk. Bosera CMSK Industrial is currently generating about -0.01 per unit of volatility. If you would invest  203.00  in Bosera CMSK Industrial on October 4, 2024 and sell it today you would lose (1.00) from holding Bosera CMSK Industrial or give up 0.49% of portfolio value over 90 days.

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

Hainan Mining Co  vs.  Bosera CMSK Industrial

Hainan Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bosera CMSK Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hainan Mining and Bosera CMSK

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

The idea behind Hainan Mining Co and Bosera CMSK Industrial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.