Correlation Between Financial Street and Minmetals Capital

Can any of the company-specific risk be diversified away by investing in both Financial Street and Minmetals Capital 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 Financial Street and Minmetals Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Financial Street Holdings and Minmetals Capital Co, you can compare the effects of market volatilities on Financial Street and Minmetals Capital 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 Financial Street with a short position of Minmetals Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Street and Minmetals Capital.

Diversification Opportunities for Financial Street and Minmetals Capital

0.82

Correlation Coefficient

Financial Street  Minmetals Capital

Very poor diversification

The 3 months correlation between Financial and Minmetals is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Financial Street Holdings and Minmetals Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minmetals Capital and Financial Street 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 Financial Street Holdings are associated (or correlated) with Minmetals Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minmetals Capital has no effect on the direction of Financial Street i.e., Financial Street and Minmetals Capital go up and down completely randomly.

Pair Corralation between Financial Street and Minmetals Capital

Assuming the 90 days trading horizon Financial Street Holdings is expected to generate 1.09 times more return on investment than Minmetals Capital. However, Financial Street is 1.09 times more volatile than Minmetals Capital Co. It trades about 0.02 of its potential returns per unit of risk. Minmetals Capital Co is currently generating about 0.02 per unit of risk. If you would invest  350.00  in Financial Street Holdings on September 29, 2024 and sell it today you would earn a total of  1.00  from holding Financial Street Holdings or generate 0.29% return on investment over 90 days.

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

Financial Street Holdings  vs.  Minmetals Capital Co

Financial Street Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Street Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Financial Street may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Minmetals Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Minmetals Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Financial Street and Minmetals Capital

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

The idea behind Financial Street Holdings and Minmetals Capital Co 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.