Correlation Between First Majestic and Hongli Group
Can any of the company-specific risk be diversified away by investing in both First Majestic and Hongli Group 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 First Majestic and Hongli Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Majestic Silver and Hongli Group Ordinary, you can compare the effects of market volatilities on First Majestic and Hongli Group 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 First Majestic with a short position of Hongli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Hongli Group.
Diversification Opportunities for First Majestic and Hongli Group
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Hongli is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Hongli Group Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongli Group Ordinary and First Majestic 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 First Majestic Silver are associated (or correlated) with Hongli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongli Group Ordinary has no effect on the direction of First Majestic i.e., First Majestic and Hongli Group go up and down completely randomly.
Pair Corralation between First Majestic and Hongli Group
Allowing for the 90-day total investment horizon First Majestic is expected to generate 2.96 times less return on investment than Hongli Group. But when comparing it to its historical volatility, First Majestic Silver is 2.12 times less risky than Hongli Group. It trades about 0.01 of its potential returns per unit of risk. Hongli Group Ordinary is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 350.00 in Hongli Group Ordinary on November 1, 2024 and sell it today you would lose (222.00) from holding Hongli Group Ordinary or give up 63.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.32% |
| Values | Daily Returns |
First Majestic Silver vs. Hongli Group Ordinary
Performance |
| Timeline |
| First Majestic Silver |
| Hongli Group Ordinary |
First Majestic and Hongli Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Hongli Group
The main advantage of trading using opposite First Majestic and Hongli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Hongli Group 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 Hongli Group will offset losses from the drop in Hongli Group's long position.| First Majestic vs. Aya Gold Silver | First Majestic vs. Silvercorp Metals | First Majestic vs. Discovery Metals Corp | First Majestic vs. Bald Eagle Gold |
| Hongli Group vs. EMCOR Group | Hongli Group vs. Sonida Senior Living | Hongli Group vs. Tandem Diabetes Care | Hongli Group vs. Xtant Medical Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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