Correlation Between Jinhui Mining and Risuntek

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

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

Diversification Opportunities for Jinhui Mining and Risuntek

0.2

Correlation Coefficient

Jinhui Mining  Risuntek

Modest diversification

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

Pair Corralation between Jinhui Mining and Risuntek

Assuming the 90 days trading horizon Jinhui Mining Co is expected to generate 0.5 times more return on investment than Risuntek. However, Jinhui Mining Co is 1.99 times less risky than Risuntek. It trades about -0.02 of its potential returns per unit of risk. Risuntek is currently generating about -0.09 per unit of risk. If you would invest  1,141  in Jinhui Mining Co on October 26, 2024 and sell it today you would lose (9.00) from holding Jinhui Mining Co or give up 0.79% of portfolio value over 90 days.

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

Jinhui Mining Co  vs.  Risuntek

Jinhui Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinhui Mining 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.

Risuntek

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Risuntek are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Risuntek is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jinhui Mining and Risuntek

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

The idea behind Jinhui Mining Co and Risuntek 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.