Correlation Between Uroica Mining and Jinhui Mining

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

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

Diversification Opportunities for Uroica Mining and Jinhui Mining

0.89

Correlation Coefficient

Uroica Mining  Jinhui Mining

Very poor diversification

The 3 months correlation between Uroica and Jinhui is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Uroica Mining Safety and Jinhui Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhui Mining and Uroica 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 Uroica Mining Safety are associated (or correlated) with Jinhui Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinhui Mining has no effect on the direction of Uroica Mining i.e., Uroica Mining and Jinhui Mining go up and down completely randomly.

Pair Corralation between Uroica Mining and Jinhui Mining

Assuming the 90 days trading horizon Uroica Mining Safety is expected to generate 1.7 times more return on investment than Jinhui Mining. However, Uroica Mining is 1.7 times more volatile than Jinhui Mining Co. It trades about 0.18 of its potential returns per unit of risk. Jinhui Mining Co is currently generating about 0.08 per unit of risk. If you would invest  459.00  in Uroica Mining Safety on August 31, 2024 and sell it today you would earn a total of  212.00  from holding Uroica Mining Safety or generate 46.19% return on investment over 90 days.

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

Uroica Mining Safety  vs.  Jinhui Mining Co

Uroica Mining Safety

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uroica Mining Safety are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Uroica Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Jinhui Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhui Mining Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinhui Mining may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Uroica Mining and Jinhui Mining

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

The idea behind Uroica Mining Safety and Jinhui Mining 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.