Correlation Between China Molybdenum and Advanced Micro

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

By analyzing existing cross correlation between China Molybdenum Co and Advanced Micro Fabrication, you can compare the effects of market volatilities on China Molybdenum and Advanced Micro 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 China Molybdenum with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Molybdenum and Advanced Micro.

Diversification Opportunities for China Molybdenum and Advanced Micro

0.27

Correlation Coefficient

China Molybdenum  Advanced Micro

Modest diversification

The 3 months correlation between China and Advanced is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding China Molybdenum Co and Advanced Micro Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Fabri and China Molybdenum 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 China Molybdenum Co are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Fabri has no effect on the direction of China Molybdenum i.e., China Molybdenum and Advanced Micro go up and down completely randomly.

Pair Corralation between China Molybdenum and Advanced Micro

Assuming the 90 days trading horizon China Molybdenum is expected to generate 6.34 times less return on investment than Advanced Micro. But when comparing it to its historical volatility, China Molybdenum Co is 2.08 times less risky than Advanced Micro. It trades about 0.06 of its potential returns per unit of risk. Advanced Micro Fabrication is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  12,407  in Advanced Micro Fabrication on September 15, 2024 and sell it today you would earn a total of  7,644  from holding Advanced Micro Fabrication or generate 61.61% return on investment over 90 days.

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

China Molybdenum Co  vs.  Advanced Micro Fabrication

China Molybdenum

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Molybdenum Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Molybdenum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Advanced Micro Fabri

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Fabrication are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Advanced Micro sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Molybdenum and Advanced Micro

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

The idea behind China Molybdenum Co and Advanced Micro Fabrication 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.