Correlation Between Chongqing Machinery and MCEWEN MINING
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and MCEWEN MINING 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 Chongqing Machinery and MCEWEN MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and MCEWEN MINING INC, you can compare the effects of market volatilities on Chongqing Machinery and MCEWEN 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 Chongqing Machinery with a short position of MCEWEN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and MCEWEN MINING.
Diversification Opportunities for Chongqing Machinery and MCEWEN MINING
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chongqing and MCEWEN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and MCEWEN MINING INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCEWEN MINING INC and Chongqing Machinery 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 Chongqing Machinery Electric are associated (or correlated) with MCEWEN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCEWEN MINING INC has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and MCEWEN MINING go up and down completely randomly.
Pair Corralation between Chongqing Machinery and MCEWEN MINING
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 0.79 times more return on investment than MCEWEN MINING. However, Chongqing Machinery Electric is 1.26 times less risky than MCEWEN MINING. It trades about 0.08 of its potential returns per unit of risk. MCEWEN MINING INC is currently generating about -0.14 per unit of risk. If you would invest 7.25 in Chongqing Machinery Electric on September 19, 2024 and sell it today you would earn a total of 0.60 from holding Chongqing Machinery Electric or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. MCEWEN MINING INC
Performance |
| Timeline |
| Chongqing Machinery |
| MCEWEN MINING INC |
Chongqing Machinery and MCEWEN MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and MCEWEN MINING
The main advantage of trading using opposite Chongqing Machinery and MCEWEN MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, MCEWEN 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 MCEWEN MINING will offset losses from the drop in MCEWEN MINING's long position.| Chongqing Machinery vs. CHEMICAL INDUSTRIES | Chongqing Machinery vs. Nissan Chemical Corp | Chongqing Machinery vs. Quaker Chemical | Chongqing Machinery vs. BW OFFSHORE LTD |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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