Correlation Between Chengtun Mining and Circuit Fabology

Can any of the company-specific risk be diversified away by investing in both Chengtun Mining and Circuit Fabology 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 Chengtun Mining and Circuit Fabology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chengtun Mining Group and Circuit Fabology Microelectronics, you can compare the effects of market volatilities on Chengtun Mining and Circuit Fabology 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 Chengtun Mining with a short position of Circuit Fabology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengtun Mining and Circuit Fabology.

Diversification Opportunities for Chengtun Mining and Circuit Fabology

0.89

Correlation Coefficient

Chengtun Mining  Circuit Fabology

Very poor diversification

The 3 months correlation between Chengtun and Circuit is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Circuit Fabology Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Circuit Fabology Mic and Chengtun Mining 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 Chengtun Mining Group are associated (or correlated) with Circuit Fabology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Circuit Fabology Mic has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Circuit Fabology go up and down completely randomly.

Pair Corralation between Chengtun Mining and Circuit Fabology

Assuming the 90 days trading horizon Chengtun Mining Group is expected to generate 0.83 times more return on investment than Circuit Fabology. However, Chengtun Mining Group is 1.2 times less risky than Circuit Fabology. It trades about 0.09 of its potential returns per unit of risk. Circuit Fabology Microelectronics is currently generating about 0.01 per unit of risk. If you would invest  363.00  in Chengtun Mining Group on September 5, 2024 and sell it today you would earn a total of  122.00  from holding Chengtun Mining Group or generate 33.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Chengtun Mining Group  vs.  Circuit Fabology Microelectron

Chengtun Mining Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Circuit Fabology Mic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Circuit Fabology Microelectronics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Circuit Fabology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chengtun Mining and Circuit Fabology

The main advantage of trading using opposite Chengtun Mining and Circuit Fabology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengtun Mining position performs unexpectedly, Circuit Fabology 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 Circuit Fabology will offset losses from the drop in Circuit Fabology's long position.

The idea behind Chengtun Mining Group and Circuit Fabology Microelectronics 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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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.