Correlation Between CHINA SHENHUA and MC Mining
Can any of the company-specific risk be diversified away by investing in both CHINA SHENHUA and MC 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 CHINA SHENHUA and MC Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA SHENHUA ENA and MC Mining, you can compare the effects of market volatilities on CHINA SHENHUA and MC 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 CHINA SHENHUA with a short position of MC Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SHENHUA and MC Mining.
Diversification Opportunities for CHINA SHENHUA and MC Mining
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CHINA and G1V is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SHENHUA ENA and MC Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MC Mining and CHINA SHENHUA 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 CHINA SHENHUA ENA are associated (or correlated) with MC Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MC Mining has no effect on the direction of CHINA SHENHUA i.e., CHINA SHENHUA and MC Mining go up and down completely randomly.
Pair Corralation between CHINA SHENHUA and MC Mining
Assuming the 90 days trading horizon CHINA SHENHUA is expected to generate 94.72 times less return on investment than MC Mining. But when comparing it to its historical volatility, CHINA SHENHUA ENA is 48.81 times less risky than MC Mining. It trades about 0.07 of its potential returns per unit of risk. MC Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7.70 in MC Mining on September 3, 2024 and sell it today you would lose (7.55) from holding MC Mining or give up 98.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SHENHUA ENA vs. MC Mining
Performance |
| Timeline |
| CHINA SHENHUA ENA |
| MC Mining |
CHINA SHENHUA and MC Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SHENHUA and MC Mining
The main advantage of trading using opposite CHINA SHENHUA and MC Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SHENHUA position performs unexpectedly, MC 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 MC Mining will offset losses from the drop in MC Mining's long position.| CHINA SHENHUA vs. CyberArk Software | CHINA SHENHUA vs. Casio Computer CoLtd | CHINA SHENHUA vs. Check Point Software | CHINA SHENHUA vs. SMA Solar Technology |
| MC Mining vs. G8 EDUCATION | MC Mining vs. NEWELL RUBBERMAID | MC Mining vs. IDP EDUCATION LTD | MC Mining vs. CHINA EDUCATION GROUP |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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