Correlation Between Metallurgical and Shandong Publishing

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

By analyzing existing cross correlation between Metallurgical of and Shandong Publishing Media, you can compare the effects of market volatilities on Metallurgical and Shandong Publishing 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 Metallurgical with a short position of Shandong Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metallurgical and Shandong Publishing.

Diversification Opportunities for Metallurgical and Shandong Publishing

-0.63

Correlation Coefficient

Metallurgical  Shandong Publishing

Excellent diversification

The 3 months correlation between Metallurgical and Shandong is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Metallurgical of and Shandong Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Publishing Media and Metallurgical 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 Metallurgical of are associated (or correlated) with Shandong Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Publishing Media has no effect on the direction of Metallurgical i.e., Metallurgical and Shandong Publishing go up and down completely randomly.

Pair Corralation between Metallurgical and Shandong Publishing

Assuming the 90 days trading horizon Metallurgical of is expected to generate 1.16 times more return on investment than Shandong Publishing. However, Metallurgical is 1.16 times more volatile than Shandong Publishing Media. It trades about 0.15 of its potential returns per unit of risk. Shandong Publishing Media is currently generating about -0.03 per unit of risk. If you would invest  260.00  in Metallurgical of on September 15, 2024 and sell it today you would earn a total of  76.00  from holding Metallurgical of or generate 29.23% return on investment over 90 days.

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

Metallurgical of  vs.  Shandong Publishing Media

Metallurgical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metallurgical of are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metallurgical sustained solid returns over the last few months and may actually be approaching a breakup point.

Shandong Publishing Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Metallurgical and Shandong Publishing

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

The idea behind Metallurgical of and Shandong Publishing Media 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.