Correlation Between China Molybdenum and Guangzhou Jinyi

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

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

Diversification Opportunities for China Molybdenum and Guangzhou Jinyi

-0.51

Correlation Coefficient

China Molybdenum  Guangzhou Jinyi

Excellent diversification

The 3 months correlation between China and Guangzhou is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding China Molybdenum Co and Guangzhou Jinyi Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jinyi Media and China Molybdenum 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 China Molybdenum Co are associated (or correlated) with Guangzhou Jinyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jinyi Media has no effect on the direction of China Molybdenum i.e., China Molybdenum and Guangzhou Jinyi go up and down completely randomly.

Pair Corralation between China Molybdenum and Guangzhou Jinyi

Assuming the 90 days trading horizon China Molybdenum Co is expected to under-perform the Guangzhou Jinyi. But the stock apears to be less risky and, when comparing its historical volatility, China Molybdenum Co is 2.04 times less risky than Guangzhou Jinyi. The stock trades about -0.13 of its potential returns per unit of risk. The Guangzhou Jinyi Media is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  660.00  in Guangzhou Jinyi Media on October 22, 2024 and sell it today you would earn a total of  76.00  from holding Guangzhou Jinyi Media or generate 11.52% return on investment over 90 days.

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

China Molybdenum Co  vs.  Guangzhou Jinyi Media

China Molybdenum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Molybdenum 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.

Guangzhou Jinyi Media

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Jinyi Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Jinyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Molybdenum and Guangzhou Jinyi

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

The idea behind China Molybdenum Co and Guangzhou Jinyi Media 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..