Correlation Between Shandong Mining and Unisplendour Corp

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Can any of the company-specific risk be diversified away by investing in both Shandong Mining and Unisplendour Corp 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 Shandong Mining and Unisplendour Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shandong Mining Machinery and Unisplendour Corp, you can compare the effects of market volatilities on Shandong Mining and Unisplendour Corp 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 Shandong Mining with a short position of Unisplendour Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Mining and Unisplendour Corp.

Diversification Opportunities for Shandong Mining and Unisplendour Corp

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Shandong and Unisplendour is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Mining Machinery and Unisplendour Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisplendour Corp and Shandong 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 Shandong Mining Machinery are associated (or correlated) with Unisplendour Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisplendour Corp has no effect on the direction of Shandong Mining i.e., Shandong Mining and Unisplendour Corp go up and down completely randomly.

Pair Corralation between Shandong Mining and Unisplendour Corp

Assuming the 90 days trading horizon Shandong Mining Machinery is expected to generate 0.91 times more return on investment than Unisplendour Corp. However, Shandong Mining Machinery is 1.1 times less risky than Unisplendour Corp. It trades about 0.08 of its potential returns per unit of risk. Unisplendour Corp is currently generating about 0.03 per unit of risk. If you would invest  218.00  in Shandong Mining Machinery on September 12, 2024 and sell it today you would earn a total of  346.00  from holding Shandong Mining Machinery or generate 158.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Shandong Mining Machinery  vs.  Unisplendour Corp

 Performance 
       Timeline  
Shandong Mining Machinery 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Mining Machinery are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Mining sustained solid returns over the last few months and may actually be approaching a breakup point.
Unisplendour Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Unisplendour Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unisplendour Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Shandong Mining and Unisplendour Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shandong Mining and Unisplendour Corp

The main advantage of trading using opposite Shandong Mining and Unisplendour Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Mining position performs unexpectedly, Unisplendour Corp 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 Unisplendour Corp will offset losses from the drop in Unisplendour Corp's long position.
The idea behind Shandong Mining Machinery and Unisplendour Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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