Correlation Between The9 and Western Sierra
Can any of the company-specific risk be diversified away by investing in both The9 and Western Sierra 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 The9 and Western Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The9 Ltd ADR and Western Sierra Mining, you can compare the effects of market volatilities on The9 and Western Sierra 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 The9 with a short position of Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of The9 and Western Sierra.
Diversification Opportunities for The9 and Western Sierra
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between The9 and Western is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining and The9 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 The9 Ltd ADR are associated (or correlated) with Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of The9 i.e., The9 and Western Sierra go up and down completely randomly.
Pair Corralation between The9 and Western Sierra
Given the investment horizon of 90 days The9 is expected to generate 51.66 times less return on investment than Western Sierra. But when comparing it to its historical volatility, The9 Ltd ADR is 18.05 times less risky than Western Sierra. It trades about 0.04 of its potential returns per unit of risk. Western Sierra Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8.84 in Western Sierra Mining on January 9, 2025 and sell it today you would lose (8.82) from holding Western Sierra Mining or give up 99.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.0% |
| Values | Daily Returns |
The9 Ltd ADR vs. Western Sierra Mining
Performance |
| Timeline |
| The9 Ltd ADR |
| Western Sierra Mining |
The9 and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The9 and Western Sierra
The main advantage of trading using opposite The9 and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The9 position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| The9 vs. Atari SA | The9 vs. Victory Square Technologies | The9 vs. Motorsport Gaming Us | The9 vs. Alpha Esports Tech |
| Western Sierra vs. City View Green | Western Sierra vs. Ravenquest Biomed | Western Sierra vs. Pure Harvest Cannabis |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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