Correlation Between China Rare and Progressive Planet

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

By analyzing existing cross correlation between China Rare Earth and Progressive Planet Solutions, you can compare the effects of market volatilities on China Rare and Progressive Planet 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 Rare with a short position of Progressive Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Rare and Progressive Planet.

Diversification Opportunities for China Rare and Progressive Planet

0.22

Correlation Coefficient

China Rare  Progressive Planet

Modest diversification

The 3 months correlation between China and Progressive is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding China Rare Earth and Progressive Planet Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Planet and China Rare 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 Rare Earth are associated (or correlated) with Progressive Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Planet has no effect on the direction of China Rare i.e., China Rare and Progressive Planet go up and down completely randomly.

Pair Corralation between China Rare and Progressive Planet

Assuming the 90 days horizon China Rare Earth is expected to generate 5.03 times more return on investment than Progressive Planet. However, China Rare is 5.03 times more volatile than Progressive Planet Solutions. It trades about 0.07 of its potential returns per unit of risk. Progressive Planet Solutions is currently generating about -0.07 per unit of risk. If you would invest  6.00  in China Rare Earth on December 31, 2024 and sell it today you would earn a total of  0.00  from holding China Rare Earth or generate 0.0% return on investment over 90 days.

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

China Rare Earth  vs.  Progressive Planet Solutions

China Rare Earth

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Rare Earth are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Rare reported solid returns over the last few months and may actually be approaching a breakup point.

Progressive Planet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Progressive Planet Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with China Rare and Progressive Planet

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

The idea behind China Rare Earth and Progressive Planet Solutions 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.