Correlation Between Shengda Mining and Guocheng Mining
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By analyzing existing cross correlation between Shengda Mining Co and Guocheng Mining Co, you can compare the effects of market volatilities on Shengda Mining and Guocheng Mining 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 Shengda Mining with a short position of Guocheng Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shengda Mining and Guocheng Mining.
Diversification Opportunities for Shengda Mining and Guocheng Mining
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shengda and Guocheng is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shengda Mining Co and Guocheng Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guocheng Mining and Shengda 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 Shengda Mining Co are associated (or correlated) with Guocheng Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guocheng Mining has no effect on the direction of Shengda Mining i.e., Shengda Mining and Guocheng Mining go up and down completely randomly.
Pair Corralation between Shengda Mining and Guocheng Mining
Assuming the 90 days trading horizon Shengda Mining Co is expected to generate 0.72 times more return on investment than Guocheng Mining. However, Shengda Mining Co is 1.39 times less risky than Guocheng Mining. It trades about 0.11 of its potential returns per unit of risk. Guocheng Mining Co is currently generating about 0.07 per unit of risk. If you would invest 1,039 in Shengda Mining Co on November 7, 2024 and sell it today you would earn a total of 345.00 from holding Shengda Mining Co or generate 33.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.13% |
| Values | Daily Returns |
Shengda Mining Co vs. Guocheng Mining Co
Performance |
| Timeline |
| Shengda Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guocheng Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shengda Mining and Guocheng Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shengda Mining and Guocheng Mining
The main advantage of trading using opposite Shengda Mining and Guocheng Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shengda Mining position performs unexpectedly, Guocheng Mining 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 Guocheng Mining will offset losses from the drop in Guocheng Mining's long position.The idea behind Shengda Mining Co and Guocheng Mining 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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