Correlation Between Huaibei Mining and Gem Year

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

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

Diversification Opportunities for Huaibei Mining and Gem Year

-0.47

Correlation Coefficient

Huaibei Mining  Gem Year

Very good diversification

The 3 months correlation between Huaibei and Gem is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Huaibei Mining Holdings and Gem Year Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gem Year Industrial and Huaibei 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 Huaibei Mining Holdings are associated (or correlated) with Gem Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gem Year Industrial has no effect on the direction of Huaibei Mining i.e., Huaibei Mining and Gem Year go up and down completely randomly.

Pair Corralation between Huaibei Mining and Gem Year

Assuming the 90 days trading horizon Huaibei Mining Holdings is expected to under-perform the Gem Year. But the stock apears to be less risky and, when comparing its historical volatility, Huaibei Mining Holdings is 1.63 times less risky than Gem Year. The stock trades about -0.2 of its potential returns per unit of risk. The Gem Year Industrial Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  443.00  in Gem Year Industrial Co on September 28, 2024 and sell it today you would lose (5.00) from holding Gem Year Industrial Co or give up 1.13% of portfolio value over 90 days.

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

Huaibei Mining Holdings  vs.  Gem Year Industrial Co

Huaibei Mining Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaibei Mining Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gem Year Industrial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem Year sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huaibei Mining and Gem Year

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

The idea behind Huaibei Mining Holdings and Gem Year Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.