Correlation Between Contango ORE and China Power

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

Diversification Opportunities for Contango ORE and China Power

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Contango and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and China Power Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Power Equipment and Contango ORE 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 Contango ORE are associated (or correlated) with China Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Power Equipment has no effect on the direction of Contango ORE i.e., Contango ORE and China Power go up and down completely randomly.

Pair Corralation between Contango ORE and China Power

If you would invest  1,030  in Contango ORE on October 23, 2024 and sell it today you would earn a total of  130.00  from holding Contango ORE or generate 12.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy94.74%
ValuesDaily Returns

Contango ORE  vs.  China Power Equipment

 Performance 
       Timeline  
Contango ORE 

Risk-Adjusted Performance

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Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
China Power Equipment 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days China Power Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, China Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Contango ORE and China Power Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Contango ORE and China Power

The main advantage of trading using opposite Contango ORE and China Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE position performs unexpectedly, China Power 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 Power will offset losses from the drop in China Power's long position.
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The idea behind Contango ORE and China Power Equipment 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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