Correlation Between Hongli Group and Ivanhoe Electric

Can any of the company-specific risk be diversified away by investing in both Hongli Group and Ivanhoe Electric 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 Hongli Group and Ivanhoe Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hongli Group Ordinary and Ivanhoe Electric, you can compare the effects of market volatilities on Hongli Group and Ivanhoe Electric 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 Hongli Group with a short position of Ivanhoe Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongli Group and Ivanhoe Electric.

Diversification Opportunities for Hongli Group and Ivanhoe Electric

0.2

Correlation Coefficient

Hongli Group  Ivanhoe Electric

Modest diversification

The 3 months correlation between Hongli and Ivanhoe is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hongli Group Ordinary and Ivanhoe Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Electric and Hongli Group 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 Hongli Group Ordinary are associated (or correlated) with Ivanhoe Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Electric has no effect on the direction of Hongli Group i.e., Hongli Group and Ivanhoe Electric go up and down completely randomly.

Pair Corralation between Hongli Group and Ivanhoe Electric

Considering the 90-day investment horizon Hongli Group Ordinary is expected to generate 0.95 times more return on investment than Ivanhoe Electric. However, Hongli Group Ordinary is 1.06 times less risky than Ivanhoe Electric. It trades about -0.03 of its potential returns per unit of risk. Ivanhoe Electric is currently generating about -0.03 per unit of risk. If you would invest  142.00  in Hongli Group Ordinary on December 28, 2024 and sell it today you would lose (13.00) from holding Hongli Group Ordinary or give up 9.15% of portfolio value over 90 days.

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

Hongli Group Ordinary  vs.  Ivanhoe Electric

Hongli Group Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hongli Group Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Hongli Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ivanhoe Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hongli Group and Ivanhoe Electric

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

The idea behind Hongli Group Ordinary and Ivanhoe Electric 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.