Correlation Between SIERRA METALS and Wenzhou Kangning

Can any of the company-specific risk be diversified away by investing in both SIERRA METALS and Wenzhou Kangning 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 SIERRA METALS and Wenzhou Kangning into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIERRA METALS and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on SIERRA METALS and Wenzhou Kangning 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 SIERRA METALS with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and Wenzhou Kangning.

Diversification Opportunities for SIERRA METALS and Wenzhou Kangning

-0.12

Correlation Coefficient

SIERRA METALS  Wenzhou Kangning

Good diversification

The 3 months correlation between SIERRA and Wenzhou is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and SIERRA METALS 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 SIERRA METALS are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of SIERRA METALS i.e., SIERRA METALS and Wenzhou Kangning go up and down completely randomly.

Pair Corralation between SIERRA METALS and Wenzhou Kangning

Assuming the 90 days trading horizon SIERRA METALS is not expected to generate positive returns. Moreover, SIERRA METALS is 2.36 times more volatile than Wenzhou Kangning Hospital. It trades away all of its potential returns to assume current level of volatility. Wenzhou Kangning Hospital is currently generating about -0.13 per unit of risk. If you would invest  60.00  in SIERRA METALS on October 23, 2024 and sell it today you would lose (2.00) from holding SIERRA METALS or give up 3.33% of portfolio value over 90 days.

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

SIERRA METALS  vs.  Wenzhou Kangning Hospital

SIERRA METALS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wenzhou Kangning Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wenzhou Kangning Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SIERRA METALS and Wenzhou Kangning

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

The idea behind SIERRA METALS and Wenzhou Kangning Hospital 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.