Correlation Between China Infrastructure and Rimrock Gold

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

By analyzing existing cross correlation between China Infrastructure Construction and Rimrock Gold Corp, you can compare the effects of market volatilities on China Infrastructure and Rimrock Gold 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 Infrastructure with a short position of Rimrock Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Infrastructure and Rimrock Gold.

Diversification Opportunities for China Infrastructure and Rimrock Gold

0.13

Correlation Coefficient

China Infrastructure  Rimrock Gold

Average diversification

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

Pair Corralation between China Infrastructure and Rimrock Gold

If you would invest  0.03  in Rimrock Gold Corp on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Rimrock Gold Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

China Infrastructure Construct  vs.  Rimrock Gold Corp

China Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Infrastructure Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, China Infrastructure is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Rimrock Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with China Infrastructure and Rimrock Gold

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

The idea behind China Infrastructure Construction and Rimrock Gold 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.