Correlation Between MINCO SILVER and Nippon Steel

Can any of the company-specific risk be diversified away by investing in both MINCO SILVER and Nippon Steel 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 MINCO SILVER and Nippon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MINCO SILVER and Nippon Steel, you can compare the effects of market volatilities on MINCO SILVER and Nippon Steel 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 MINCO SILVER with a short position of Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MINCO SILVER and Nippon Steel.

Diversification Opportunities for MINCO SILVER and Nippon Steel

-0.55

Correlation Coefficient

MINCO SILVER  Nippon Steel

Excellent diversification

The 3 months correlation between MINCO and Nippon is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding MINCO SILVER and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel and MINCO SILVER 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 MINCO SILVER are associated (or correlated) with Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of MINCO SILVER i.e., MINCO SILVER and Nippon Steel go up and down completely randomly.

Pair Corralation between MINCO SILVER and Nippon Steel

Assuming the 90 days trading horizon MINCO SILVER is expected to under-perform the Nippon Steel. In addition to that, MINCO SILVER is 3.22 times more volatile than Nippon Steel. It trades about -0.07 of its total potential returns per unit of risk. Nippon Steel is currently generating about -0.14 per unit of volatility. If you would invest  1,880  in Nippon Steel on September 21, 2024 and sell it today you would lose (71.00) from holding Nippon Steel or give up 3.78% of portfolio value over 90 days.

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

MINCO SILVER  vs.  Nippon Steel

MINCO SILVER

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MINCO SILVER are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, MINCO SILVER unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nippon Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MINCO SILVER and Nippon Steel

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

The idea behind MINCO SILVER and Nippon Steel 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.