Correlation Between Zhuhai Comleader and Sinomine Resource

Can any of the company-specific risk be diversified away by investing in both Zhuhai Comleader and Sinomine Resource 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 Zhuhai Comleader and Sinomine Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhuhai Comleader Information and Sinomine Resource Exploration, you can compare the effects of market volatilities on Zhuhai Comleader and Sinomine Resource 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 Zhuhai Comleader with a short position of Sinomine Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuhai Comleader and Sinomine Resource.

Diversification Opportunities for Zhuhai Comleader and Sinomine Resource

0.53

Correlation Coefficient

Zhuhai Comleader  Sinomine Resource

Very weak diversification

The 3 months correlation between Zhuhai and Sinomine is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zhuhai Comleader Information and Sinomine Resource Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomine Resource and Zhuhai Comleader 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 Zhuhai Comleader Information are associated (or correlated) with Sinomine Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomine Resource has no effect on the direction of Zhuhai Comleader i.e., Zhuhai Comleader and Sinomine Resource go up and down completely randomly.

Pair Corralation between Zhuhai Comleader and Sinomine Resource

Assuming the 90 days trading horizon Zhuhai Comleader is expected to generate 1.2 times less return on investment than Sinomine Resource. In addition to that, Zhuhai Comleader is 1.27 times more volatile than Sinomine Resource Exploration. It trades about 0.01 of its total potential returns per unit of risk. Sinomine Resource Exploration is currently generating about 0.02 per unit of volatility. If you would invest  3,502  in Sinomine Resource Exploration on October 5, 2024 and sell it today you would lose (21.00) from holding Sinomine Resource Exploration or give up 0.6% of portfolio value over 90 days.

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

Zhuhai Comleader Information  vs.  Sinomine Resource Exploration

Zhuhai Comleader Inf

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuhai Comleader Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuhai Comleader may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sinomine Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinomine Resource Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sinomine Resource is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhuhai Comleader and Sinomine Resource

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

The idea behind Zhuhai Comleader Information and Sinomine Resource Exploration 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.