Correlation Between BAIYU Holdings and MP Materials

Can any of the company-specific risk be diversified away by investing in both BAIYU Holdings and MP Materials 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 BAIYU Holdings and MP Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BAIYU Holdings and MP Materials Corp, you can compare the effects of market volatilities on BAIYU Holdings and MP Materials 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 BAIYU Holdings with a short position of MP Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIYU Holdings and MP Materials.

Diversification Opportunities for BAIYU Holdings and MP Materials

0.0

Correlation Coefficient

BAIYU Holdings  MP Materials

Pay attention - limited upside

The 3 months correlation between BAIYU and MP Materials is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings and MP Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MP Materials Corp and BAIYU Holdings 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 BAIYU Holdings are associated (or correlated) with MP Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MP Materials Corp has no effect on the direction of BAIYU Holdings i.e., BAIYU Holdings and MP Materials go up and down completely randomly.

Pair Corralation between BAIYU Holdings and MP Materials

If you would invest  1,598  in MP Materials Corp on December 30, 2024 and sell it today you would earn a total of  999.00  from holding MP Materials Corp or generate 62.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BAIYU Holdings  vs.  MP Materials Corp

BAIYU Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BAIYU Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MP Materials Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MP Materials Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MP Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BAIYU Holdings and MP Materials

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

The idea behind BAIYU Holdings and MP Materials Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.