Correlation Between Gansu Yasheng and Tongling Nonferrous

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

By analyzing existing cross correlation between Gansu Yasheng Industrial and Tongling Nonferrous Metals, you can compare the effects of market volatilities on Gansu Yasheng and Tongling Nonferrous 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 Gansu Yasheng with a short position of Tongling Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Yasheng and Tongling Nonferrous.

Diversification Opportunities for Gansu Yasheng and Tongling Nonferrous

0.36

Correlation Coefficient

Gansu Yasheng  Tongling Nonferrous

Weak diversification

The 3 months correlation between Gansu and Tongling is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Yasheng Industrial and Tongling Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongling Nonferrous and Gansu Yasheng 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 Gansu Yasheng Industrial are associated (or correlated) with Tongling Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongling Nonferrous has no effect on the direction of Gansu Yasheng i.e., Gansu Yasheng and Tongling Nonferrous go up and down completely randomly.

Pair Corralation between Gansu Yasheng and Tongling Nonferrous

Assuming the 90 days trading horizon Gansu Yasheng is expected to generate 12.4 times less return on investment than Tongling Nonferrous. But when comparing it to its historical volatility, Gansu Yasheng Industrial is 1.16 times less risky than Tongling Nonferrous. It trades about 0.0 of its potential returns per unit of risk. Tongling Nonferrous Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  315.00  in Tongling Nonferrous Metals on September 26, 2024 and sell it today you would earn a total of  18.00  from holding Tongling Nonferrous Metals or generate 5.71% return on investment over 90 days.

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

Gansu Yasheng Industrial  vs.  Tongling Nonferrous Metals

Gansu Yasheng Industrial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Yasheng Industrial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Yasheng sustained solid returns over the last few months and may actually be approaching a breakup point.

Tongling Nonferrous

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tongling Nonferrous Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tongling Nonferrous is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gansu Yasheng and Tongling Nonferrous

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

The idea behind Gansu Yasheng Industrial and Tongling Nonferrous Metals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.