Correlation Between Hainan Mining and APT Medical

Can any of the company-specific risk be diversified away by investing in both Hainan Mining and APT Medical 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 APT Medical 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 APT Medical, you can compare the effects of market volatilities on Hainan Mining and APT Medical 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 APT Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Mining and APT Medical.

Diversification Opportunities for Hainan Mining and APT Medical

-0.03

Correlation Coefficient

Hainan Mining  APT Medical

Good diversification

The 3 months correlation between Hainan and APT is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Mining Co and APT Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Medical 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 APT Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Medical has no effect on the direction of Hainan Mining i.e., Hainan Mining and APT Medical go up and down completely randomly.

Pair Corralation between Hainan Mining and APT Medical

Assuming the 90 days trading horizon Hainan Mining Co is expected to under-perform the APT Medical. In addition to that, Hainan Mining is 1.15 times more volatile than APT Medical. It trades about -0.2 of its total potential returns per unit of risk. APT Medical is currently generating about -0.12 per unit of volatility. If you would invest  36,633  in APT Medical on October 11, 2024 and sell it today you would lose (2,025) from holding APT Medical or give up 5.53% of portfolio value over 90 days.

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

Hainan Mining Co  vs.  APT Medical

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.

APT Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APT Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APT Medical 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 APT Medical

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

The idea behind Hainan Mining Co and APT Medical 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.