Correlation Between CMC Investment and Thien Long

Can any of the company-specific risk be diversified away by investing in both CMC Investment and Thien Long 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 CMC Investment and Thien Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CMC Investment JSC and Thien Long Group, you can compare the effects of market volatilities on CMC Investment and Thien Long 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 CMC Investment with a short position of Thien Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Investment and Thien Long.

Diversification Opportunities for CMC Investment and Thien Long

-0.21

Correlation Coefficient

CMC Investment  Thien Long

Very good diversification

The 3 months correlation between CMC and Thien is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment JSC and Thien Long Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thien Long Group and CMC Investment 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 CMC Investment JSC are associated (or correlated) with Thien Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thien Long Group has no effect on the direction of CMC Investment i.e., CMC Investment and Thien Long go up and down completely randomly.

Pair Corralation between CMC Investment and Thien Long

Assuming the 90 days trading horizon CMC Investment JSC is expected to generate 2.81 times more return on investment than Thien Long. However, CMC Investment is 2.81 times more volatile than Thien Long Group. It trades about 0.1 of its potential returns per unit of risk. Thien Long Group is currently generating about -0.07 per unit of risk. If you would invest  580,000  in CMC Investment JSC on December 19, 2024 and sell it today you would earn a total of  120,000  from holding CMC Investment JSC or generate 20.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.46%
Values	Daily Returns

CMC Investment JSC  vs.  Thien Long Group

CMC Investment JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Investment JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, CMC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Thien Long Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thien Long Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CMC Investment and Thien Long

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

The idea behind CMC Investment JSC and Thien Long Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.