Correlation Between Marimaca Copper and Hongli Group

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

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

Diversification Opportunities for Marimaca Copper and Hongli Group

0.25

Correlation Coefficient

Marimaca Copper  Hongli Group

Modest diversification

The 3 months correlation between Marimaca and Hongli is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and Hongli Group Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongli Group Ordinary and Marimaca Copper 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 Marimaca Copper Corp are associated (or correlated) with Hongli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongli Group Ordinary has no effect on the direction of Marimaca Copper i.e., Marimaca Copper and Hongli Group go up and down completely randomly.

Pair Corralation between Marimaca Copper and Hongli Group

Assuming the 90 days horizon Marimaca Copper Corp is expected to generate 0.64 times more return on investment than Hongli Group. However, Marimaca Copper Corp is 1.55 times less risky than Hongli Group. It trades about 0.12 of its potential returns per unit of risk. Hongli Group Ordinary is currently generating about 0.06 per unit of risk. If you would invest  300.00  in Marimaca Copper Corp on October 24, 2024 and sell it today you would earn a total of  62.00  from holding Marimaca Copper Corp or generate 20.67% return on investment over 90 days.

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

Marimaca Copper Corp  vs.  Hongli Group Ordinary

Marimaca Copper Corp

Risk-Adjusted Performance

9 of 100

OK

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

Hongli Group Ordinary

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hongli Group Ordinary are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Hongli Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marimaca Copper and Hongli Group

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

The idea behind Marimaca Copper Corp and Hongli Group Ordinary 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.