Correlation Between RoadMain T and Shandong Mining

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

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

Diversification Opportunities for RoadMain T and Shandong Mining

-0.28

Correlation Coefficient

RoadMain T  Shandong Mining

Very good diversification

The 3 months correlation between RoadMain and Shandong is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding RoadMain T Co and Shandong Mining Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Mining Machinery and RoadMain T 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 RoadMain T Co are associated (or correlated) with Shandong Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Mining Machinery has no effect on the direction of RoadMain T i.e., RoadMain T and Shandong Mining go up and down completely randomly.

Pair Corralation between RoadMain T and Shandong Mining

Assuming the 90 days trading horizon RoadMain T Co is expected to under-perform the Shandong Mining. But the stock apears to be less risky and, when comparing its historical volatility, RoadMain T Co is 2.0 times less risky than Shandong Mining. The stock trades about -0.1 of its potential returns per unit of risk. The Shandong Mining Machinery is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  369.00  in Shandong Mining Machinery on October 27, 2024 and sell it today you would earn a total of  12.00  from holding Shandong Mining Machinery or generate 3.25% return on investment over 90 days.

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

RoadMain T Co  vs.  Shandong Mining Machinery

RoadMain T

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RoadMain T 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shandong Mining Machinery

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Mining Machinery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RoadMain T and Shandong Mining

The main advantage of trading using opposite RoadMain T and Shandong Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RoadMain T position performs unexpectedly, Shandong Mining 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 Shandong Mining will offset losses from the drop in Shandong Mining's long position.

The idea behind RoadMain T Co and Shandong Mining Machinery 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.