Correlation Between Hainan Mining and Western Metal
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By analyzing existing cross correlation between Hainan Mining Co and Western Metal Materials, you can compare the effects of market volatilities on Hainan Mining 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 Hainan Mining with a short position of Western Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Mining and Western Metal.
Diversification Opportunities for Hainan Mining and Western Metal
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hainan and Western is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Mining 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 Hainan 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 Hainan Mining 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 Hainan Mining i.e., Hainan Mining and Western Metal go up and down completely randomly.
Pair Corralation between Hainan Mining and Western Metal
Assuming the 90 days trading horizon Hainan Mining is expected to generate 1.27 times less return on investment than Western Metal. But when comparing it to its historical volatility, Hainan Mining Co is 1.09 times less risky than Western Metal. It trades about 0.02 of its potential returns per unit of risk. Western Metal Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,610 in Western Metal Materials on September 23, 2024 and sell it today you would earn a total of 201.00 from holding Western Metal Materials or generate 12.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hainan Mining Co vs. Western Metal Materials
Performance |
Timeline |
Hainan Mining |
Western Metal Materials |
Hainan Mining and Western Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hainan Mining and Western Metal
The main advantage of trading using opposite Hainan Mining and Western Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hainan Mining 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.Hainan Mining vs. Wanhua Chemical Group | Hainan Mining vs. Baoshan Iron Steel | Hainan Mining vs. Shandong Gold Mining | Hainan Mining vs. Rongsheng Petrochemical Co |
Western Metal vs. Zijin Mining Group | Western Metal vs. Wanhua Chemical Group | Western Metal vs. Baoshan Iron Steel | Western Metal vs. Shandong Gold Mining |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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