Correlation Between China Rare and Mincor Resources

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

By analyzing existing cross correlation between China Rare Earth and Mincor Resources NL, you can compare the effects of market volatilities on China Rare and Mincor Resources 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 Rare with a short position of Mincor Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Rare and Mincor Resources.

Diversification Opportunities for China Rare and Mincor Resources

0.13

Correlation Coefficient

China Rare  Mincor Resources

Average diversification

The 3 months correlation between China and Mincor is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding China Rare Earth and Mincor Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mincor Resources and China Rare 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 Rare Earth are associated (or correlated) with Mincor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mincor Resources has no effect on the direction of China Rare i.e., China Rare and Mincor Resources go up and down completely randomly.

Pair Corralation between China Rare and Mincor Resources

If you would invest  1.00  in China Rare Earth on September 2, 2024 and sell it today you would earn a total of  5.00  from holding China Rare Earth or generate 500.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

China Rare Earth  vs.  Mincor Resources NL

China Rare Earth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Rare Earth are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, China Rare reported solid returns over the last few months and may actually be approaching a breakup point.

Mincor Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mincor Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mincor Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with China Rare and Mincor Resources

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

The idea behind China Rare Earth and Mincor Resources NL 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.