Correlation Between China Molybdenum and Imeik Technology

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

Diversification Opportunities for China Molybdenum and Imeik Technology

0.65

Correlation Coefficient

China Molybdenum  Imeik Technology

Poor diversification

The 3 months correlation between China and Imeik is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding China Molybdenum Co and Imeik Technology Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imeik Technology Dev 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 Imeik Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imeik Technology Dev has no effect on the direction of China Molybdenum i.e., China Molybdenum and Imeik Technology go up and down completely randomly.

Pair Corralation between China Molybdenum and Imeik Technology

Assuming the 90 days trading horizon China Molybdenum Co is expected to under-perform the Imeik Technology. But the stock apears to be less risky and, when comparing its historical volatility, China Molybdenum Co is 1.41 times less risky than Imeik Technology. The stock trades about -0.14 of its potential returns per unit of risk. The Imeik Technology Development is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  21,080  in Imeik Technology Development on September 19, 2024 and sell it today you would lose (474.00) from holding Imeik Technology Development or give up 2.25% of portfolio value over 90 days.

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

China Molybdenum Co  vs.  Imeik Technology Development

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 somewhat strong basic indicators, China Molybdenum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Imeik Technology Dev

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with China Molybdenum and Imeik Technology

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

The idea behind China Molybdenum Co and Imeik Technology Development 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.