Correlation Between Hefei Metalforming and Aluminum Corp

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

Diversification Opportunities for Hefei Metalforming and Aluminum Corp

0.39

Correlation Coefficient

Hefei Metalforming  Aluminum Corp

Weak diversification

The 3 months correlation between Hefei and Aluminum is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Aluminum Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp 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 Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Aluminum Corp go up and down completely randomly.

Pair Corralation between Hefei Metalforming and Aluminum Corp

Assuming the 90 days trading horizon Hefei Metalforming is expected to generate 4.51 times less return on investment than Aluminum Corp. In addition to that, Hefei Metalforming is 1.36 times more volatile than Aluminum Corp of. It trades about 0.01 of its total potential returns per unit of risk. Aluminum Corp of is currently generating about 0.06 per unit of volatility. If you would invest  443.00  in Aluminum Corp of on September 19, 2024 and sell it today you would earn a total of  296.00  from holding Aluminum Corp of or generate 66.82% return on investment over 90 days.

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

Hefei Metalforming Mach  vs.  Aluminum Corp of

Hefei Metalforming Mach

Risk-Adjusted Performance

11 of 100

Good

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

Aluminum Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum Corp of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aluminum Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hefei Metalforming and Aluminum Corp

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

The idea behind Hefei Metalforming Mach and Aluminum Corp of 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.