Correlation Between Twin Ridge and China Molybdenum

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

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

Diversification Opportunities for Twin Ridge and China Molybdenum

-0.77

Correlation Coefficient

Twin Ridge  China Molybdenum

Pay attention - limited upside

The 3 months correlation between Twin and China is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Twin Ridge Capital and China Molybdenum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Molybdenum and Twin Ridge 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 Twin Ridge Capital are associated (or correlated) with China Molybdenum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Molybdenum has no effect on the direction of Twin Ridge i.e., Twin Ridge and China Molybdenum go up and down completely randomly.

Pair Corralation between Twin Ridge and China Molybdenum

If you would invest  1,072  in Twin Ridge Capital on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Twin Ridge Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Twin Ridge Capital  vs.  China Molybdenum Co

Twin Ridge Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

China Molybdenum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Molybdenum Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Twin Ridge and China Molybdenum

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

The idea behind Twin Ridge Capital and China Molybdenum 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.