Correlation Between Hygon Information and China Molybdenum

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

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

Diversification Opportunities for Hygon Information and China Molybdenum

-0.13

Correlation Coefficient

Hygon Information  China Molybdenum

Good diversification

The 3 months correlation between Hygon and China is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hygon Information Technology and China Molybdenum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Molybdenum and Hygon Information 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 Hygon Information Technology are associated (or correlated) with China Molybdenum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Molybdenum has no effect on the direction of Hygon Information i.e., Hygon Information and China Molybdenum go up and down completely randomly.

Pair Corralation between Hygon Information and China Molybdenum

Assuming the 90 days trading horizon Hygon Information is expected to generate 1.19 times less return on investment than China Molybdenum. In addition to that, Hygon Information is 2.14 times more volatile than China Molybdenum Co. It trades about 0.03 of its total potential returns per unit of risk. China Molybdenum Co is currently generating about 0.09 per unit of volatility. If you would invest  699.00  in China Molybdenum Co on December 24, 2024 and sell it today you would earn a total of  65.00  from holding China Molybdenum Co or generate 9.3% return on investment over 90 days.

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

Hygon Information Technology  vs.  China Molybdenum Co

Hygon Information

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hygon Information Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hygon Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

China Molybdenum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Molybdenum Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Molybdenum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hygon Information and China Molybdenum

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

The idea behind Hygon Information Technology and China Molybdenum 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.