Correlation Between MINCO SILVER and China Communications
Can any of the company-specific risk be diversified away by investing in both MINCO SILVER and China Communications 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 MINCO SILVER and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MINCO SILVER and China Communications Construction, you can compare the effects of market volatilities on MINCO SILVER and China Communications 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 MINCO SILVER with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MINCO SILVER and China Communications.
Diversification Opportunities for MINCO SILVER and China Communications
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MINCO and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MINCO SILVER and China Communications Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and MINCO SILVER 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 MINCO SILVER are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of MINCO SILVER i.e., MINCO SILVER and China Communications go up and down completely randomly.
Pair Corralation between MINCO SILVER and China Communications
Assuming the 90 days trading horizon MINCO SILVER is expected to generate 44.48 times less return on investment than China Communications. But when comparing it to its historical volatility, MINCO SILVER is 2.8 times less risky than China Communications. It trades about 0.01 of its potential returns per unit of risk. China Communications Construction is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 48.00 in China Communications Construction on September 12, 2024 and sell it today you would earn a total of 13.00 from holding China Communications Construction or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MINCO SILVER vs. China Communications Construct
Performance |
| Timeline |
| MINCO SILVER |
| China Communications |
MINCO SILVER and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MINCO SILVER and China Communications
The main advantage of trading using opposite MINCO SILVER and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MINCO SILVER position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| MINCO SILVER vs. Apple Inc | MINCO SILVER vs. Apple Inc | MINCO SILVER vs. Apple Inc | MINCO SILVER vs. Apple Inc |
| China Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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