Correlation Between China International and Minmetals Capital

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

By analyzing existing cross correlation between China International Capital and Minmetals Capital Co, you can compare the effects of market volatilities on China International and Minmetals Capital 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 China International with a short position of Minmetals Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of China International and Minmetals Capital.

Diversification Opportunities for China International and Minmetals Capital

0.1

Correlation Coefficient

China International  Minmetals Capital

Average diversification

The 3 months correlation between China and Minmetals is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding China International Capital and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital and China International 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 China International Capital are associated (or correlated) with Minmetals Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minmetals Capital has no effect on the direction of China International i.e., China International and Minmetals Capital go up and down completely randomly.

Pair Corralation between China International and Minmetals Capital

Assuming the 90 days trading horizon China International Capital is expected to generate 1.37 times more return on investment than Minmetals Capital. However, China International is 1.37 times more volatile than Minmetals Capital Co. It trades about 0.0 of its potential returns per unit of risk. Minmetals Capital Co is currently generating about -0.12 per unit of risk. If you would invest  3,518  in China International Capital on December 26, 2024 and sell it today you would lose (69.00) from holding China International Capital or give up 1.96% of portfolio value over 90 days.

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

China International Capital  vs.  Minmetals Capital Co

China International

Risk-Adjusted Performance

Very Weak

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

Minmetals Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Minmetals Capital Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with China International and Minmetals Capital

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

The idea behind China International Capital and Minmetals Capital Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.