Correlation Between CIMC Vehicles and Western Metal

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Can any of the company-specific risk be diversified away by investing in both CIMC Vehicles and Western Metal 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 CIMC Vehicles and Western Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIMC Vehicles Co and Western Metal Materials, you can compare the effects of market volatilities on CIMC Vehicles and Western Metal 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 CIMC Vehicles with a short position of Western Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMC Vehicles and Western Metal.

Diversification Opportunities for CIMC Vehicles and Western Metal

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between CIMC and Western is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CIMC Vehicles Co and Western Metal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metal Materials and CIMC Vehicles 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 CIMC Vehicles Co are associated (or correlated) with Western Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metal Materials has no effect on the direction of CIMC Vehicles i.e., CIMC Vehicles and Western Metal go up and down completely randomly.

Pair Corralation between CIMC Vehicles and Western Metal

Assuming the 90 days trading horizon CIMC Vehicles is expected to generate 4.21 times less return on investment than Western Metal. In addition to that, CIMC Vehicles is 1.02 times more volatile than Western Metal Materials. It trades about 0.05 of its total potential returns per unit of risk. Western Metal Materials is currently generating about 0.2 per unit of volatility. If you would invest  1,260  in Western Metal Materials on September 23, 2024 and sell it today you would earn a total of  551.00  from holding Western Metal Materials or generate 43.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

CIMC Vehicles Co  vs.  Western Metal Materials

 Performance 
       Timeline  
CIMC Vehicles 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in CIMC Vehicles Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CIMC Vehicles may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Western Metal Materials 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Western Metal Materials are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Western Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

CIMC Vehicles and Western Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CIMC Vehicles and Western Metal

The main advantage of trading using opposite CIMC Vehicles and Western Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIMC Vehicles position performs unexpectedly, Western Metal 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 Western Metal will offset losses from the drop in Western Metal's long position.
The idea behind CIMC Vehicles Co and Western Metal Materials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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