Correlation Between CN DATANG and CORNISH METALS

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

By analyzing existing cross correlation between CN DATANG C and CORNISH METALS INC, you can compare the effects of market volatilities on CN DATANG and CORNISH METALS 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 CN DATANG with a short position of CORNISH METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN DATANG and CORNISH METALS.

Diversification Opportunities for CN DATANG and CORNISH METALS

-0.56

Correlation Coefficient

CN DATANG  CORNISH METALS

Excellent diversification

The 3 months correlation between DT7 and CORNISH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CN DATANG C and CORNISH METALS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CORNISH METALS INC and CN DATANG 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 CN DATANG C are associated (or correlated) with CORNISH METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CORNISH METALS INC has no effect on the direction of CN DATANG i.e., CN DATANG and CORNISH METALS go up and down completely randomly.

Pair Corralation between CN DATANG and CORNISH METALS

Assuming the 90 days trading horizon CN DATANG is expected to generate 1.36 times less return on investment than CORNISH METALS. But when comparing it to its historical volatility, CN DATANG C is 1.39 times less risky than CORNISH METALS. It trades about 0.04 of its potential returns per unit of risk. CORNISH METALS INC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8.85  in CORNISH METALS INC on December 26, 2024 and sell it today you would earn a total of  0.30  from holding CORNISH METALS INC or generate 3.39% return on investment over 90 days.

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

CN DATANG C  vs.  CORNISH METALS INC

CN DATANG C

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN DATANG C are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CN DATANG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CORNISH METALS INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CORNISH METALS INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CORNISH METALS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CN DATANG and CORNISH METALS

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

The idea behind CN DATANG C and CORNISH METALS INC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.