Correlation Between Hefei Metalforming and Sino Platinum

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

By analyzing existing cross correlation between Hefei Metalforming Mach and Sino Platinum Metals Co, you can compare the effects of market volatilities on Hefei Metalforming and Sino Platinum 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 Hefei Metalforming with a short position of Sino Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Sino Platinum.

Diversification Opportunities for Hefei Metalforming and Sino Platinum

0.44

Correlation Coefficient

Hefei Metalforming  Sino Platinum

Very weak diversification

The 3 months correlation between Hefei and Sino is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Sino Platinum Metals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Platinum Metals and Hefei Metalforming 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 Hefei Metalforming Mach are associated (or correlated) with Sino Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Platinum Metals has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Sino Platinum go up and down completely randomly.

Pair Corralation between Hefei Metalforming and Sino Platinum

Assuming the 90 days trading horizon Hefei Metalforming is expected to generate 1.6 times less return on investment than Sino Platinum. In addition to that, Hefei Metalforming is 1.85 times more volatile than Sino Platinum Metals Co. It trades about 0.0 of its total potential returns per unit of risk. Sino Platinum Metals Co is currently generating about 0.0 per unit of volatility. If you would invest  1,411  in Sino Platinum Metals Co on October 7, 2024 and sell it today you would lose (69.00) from holding Sino Platinum Metals Co or give up 4.89% of portfolio value over 90 days.

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

Hefei Metalforming Mach  vs.  Sino Platinum Metals Co

Hefei Metalforming Mach

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sino Platinum Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino Platinum Metals Co 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 Hefei Metalforming and Sino Platinum

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

The idea behind Hefei Metalforming Mach and Sino Platinum Metals 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.