Correlation Between Eurasia Mining and China Railway

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

By analyzing existing cross correlation between Eurasia Mining Plc and China Railway Signal, you can compare the effects of market volatilities on Eurasia Mining and China Railway 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 Eurasia Mining with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurasia Mining and China Railway.

Diversification Opportunities for Eurasia Mining and China Railway

0.0

Correlation Coefficient

Eurasia Mining  China Railway

Pay attention - limited upside

The 3 months correlation between Eurasia and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eurasia Mining Plc and China Railway Signal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Signal and Eurasia Mining 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 Eurasia Mining Plc are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Signal has no effect on the direction of Eurasia Mining i.e., Eurasia Mining and China Railway go up and down completely randomly.

Pair Corralation between Eurasia Mining and China Railway

If you would invest  1.80  in Eurasia Mining Plc on December 20, 2024 and sell it today you would earn a total of  0.55  from holding Eurasia Mining Plc or generate 30.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.72%
Values	Daily Returns

Eurasia Mining Plc  vs.  China Railway Signal

Eurasia Mining Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurasia Mining Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Eurasia Mining reported solid returns over the last few months and may actually be approaching a breakup point.

China Railway Signal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Railway Signal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Railway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eurasia Mining and China Railway

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

The idea behind Eurasia Mining Plc and China Railway Signal 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.