Correlation Between Minerals Technologies and China Health
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and China Health 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 Minerals Technologies and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and China Health Industries, you can compare the effects of market volatilities on Minerals Technologies and China Health 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 Minerals Technologies with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and China Health.
Diversification Opportunities for Minerals Technologies and China Health
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Minerals and China is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and China Health Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Industries and Minerals Technologies 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 Minerals Technologies are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Industries has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and China Health go up and down completely randomly.
Pair Corralation between Minerals Technologies and China Health
Considering the 90-day investment horizon Minerals Technologies is expected to generate 0.27 times more return on investment than China Health. However, Minerals Technologies is 3.67 times less risky than China Health. It trades about -0.36 of its potential returns per unit of risk. China Health Industries is currently generating about -0.14 per unit of risk. If you would invest 8,460 in Minerals Technologies on September 24, 2024 and sell it today you would lose (855.00) from holding Minerals Technologies or give up 10.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Minerals Technologies vs. China Health Industries
Performance |
| Timeline |
| Minerals Technologies |
| China Health Industries |
Minerals Technologies and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and China Health
The main advantage of trading using opposite Minerals Technologies and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, China Health 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 Health will offset losses from the drop in China Health's long position.The idea behind Minerals Technologies and China Health Industries 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.| China Health vs. Keurig Dr Pepper | China Health vs. Diamond Estates Wines | China Health vs. NETGEAR | China Health vs. Vodka Brands Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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