Correlation Between CHINA SOUTHN and FOKUS MINING

Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and FOKUS 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 SOUTHN and FOKUS MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHINA SOUTHN AIR H and FOKUS MINING P, you can compare the effects of market volatilities on CHINA SOUTHN and FOKUS 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 SOUTHN with a short position of FOKUS MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and FOKUS MINING.

Diversification Opportunities for CHINA SOUTHN and FOKUS MINING

0.63

Correlation Coefficient

CHINA SOUTHN  FOKUS MINING

Poor diversification

The 3 months correlation between CHINA and FOKUS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and FOKUS MINING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOKUS MINING P and CHINA SOUTHN 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 SOUTHN AIR H are associated (or correlated) with FOKUS MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOKUS MINING P has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and FOKUS MINING go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and FOKUS MINING

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to generate 0.49 times more return on investment than FOKUS MINING. However, CHINA SOUTHN AIR H is 2.03 times less risky than FOKUS MINING. It trades about 0.06 of its potential returns per unit of risk. FOKUS MINING P is currently generating about -0.02 per unit of risk. If you would invest  37.00  in CHINA SOUTHN AIR H on April 23, 2025 and sell it today you would earn a total of  3.00  from holding CHINA SOUTHN AIR H or generate 8.11% return on investment over 90 days.

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

CHINA SOUTHN AIR H   vs.  FOKUS MINING P

CHINA SOUTHN AIR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SOUTHN AIR H are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CHINA SOUTHN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

FOKUS MINING P

Risk-Adjusted Performance

Very Weak

Over the last 90 days FOKUS MINING P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, FOKUS MINING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHINA SOUTHN and FOKUS MINING

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

The idea behind CHINA SOUTHN AIR H and FOKUS MINING P 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.