Correlation Between Fecon Mining and Ngan Son

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

By analyzing existing cross correlation between Fecon Mining JSC and Ngan Son JSC, you can compare the effects of market volatilities on Fecon Mining and Ngan Son 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 Fecon Mining with a short position of Ngan Son. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and Ngan Son.

Diversification Opportunities for Fecon Mining and Ngan Son

0.61

Correlation Coefficient

Fecon Mining  Ngan Son

Poor diversification

The 3 months correlation between Fecon and Ngan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fecon Mining JSC and Ngan Son JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngan Son JSC and Fecon 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 Fecon Mining JSC are associated (or correlated) with Ngan Son. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngan Son JSC has no effect on the direction of Fecon Mining i.e., Fecon Mining and Ngan Son go up and down completely randomly.

Pair Corralation between Fecon Mining and Ngan Son

Assuming the 90 days trading horizon Fecon Mining JSC is expected to generate 1.41 times more return on investment than Ngan Son. However, Fecon Mining is 1.41 times more volatile than Ngan Son JSC. It trades about 0.14 of its potential returns per unit of risk. Ngan Son JSC is currently generating about 0.12 per unit of risk. If you would invest  307,000  in Fecon Mining JSC on December 21, 2024 and sell it today you would earn a total of  100,000  from holding Fecon Mining JSC or generate 32.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	67.24%
Values	Daily Returns

Fecon Mining JSC  vs.  Ngan Son JSC

Fecon Mining JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fecon Mining JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Fecon Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Ngan Son JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ngan Son JSC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ngan Son displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fecon Mining and Ngan Son

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

The idea behind Fecon Mining JSC and Ngan Son JSC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.