Correlation Between Yindu Kitchen and Minmetals Capital

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

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

Diversification Opportunities for Yindu Kitchen and Minmetals Capital

-0.01

Correlation Coefficient

Yindu Kitchen  Minmetals Capital

Good diversification

The 3 months correlation between Yindu and Minmetals is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Yindu Kitchen Equipment and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital and Yindu Kitchen 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 Yindu Kitchen Equipment 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 Yindu Kitchen i.e., Yindu Kitchen and Minmetals Capital go up and down completely randomly.

Pair Corralation between Yindu Kitchen and Minmetals Capital

Assuming the 90 days trading horizon Yindu Kitchen Equipment is expected to generate 0.71 times more return on investment than Minmetals Capital. However, Yindu Kitchen Equipment is 1.41 times less risky than Minmetals Capital. It trades about 0.14 of its potential returns per unit of risk. Minmetals Capital Co is currently generating about -0.04 per unit of risk. If you would invest  2,343  in Yindu Kitchen Equipment on September 26, 2024 and sell it today you would earn a total of  92.00  from holding Yindu Kitchen Equipment or generate 3.93% return on investment over 90 days.

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

Yindu Kitchen Equipment  vs.  Minmetals Capital Co

Yindu Kitchen Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

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

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Minmetals Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yindu Kitchen and Minmetals Capital

The main advantage of trading using opposite Yindu Kitchen and Minmetals Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yindu Kitchen 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 Yindu Kitchen Equipment 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.