Correlation Between Bosera CMSK and Baoshan Iron
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By analyzing existing cross correlation between Bosera CMSK Industrial and Baoshan Iron Steel, you can compare the effects of market volatilities on Bosera CMSK and Baoshan Iron 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 Bosera CMSK with a short position of Baoshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosera CMSK and Baoshan Iron.
Diversification Opportunities for Bosera CMSK and Baoshan Iron
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bosera and Baoshan is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bosera CMSK Industrial and Baoshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baoshan Iron Steel and Bosera CMSK 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 Bosera CMSK Industrial are associated (or correlated) with Baoshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baoshan Iron Steel has no effect on the direction of Bosera CMSK i.e., Bosera CMSK and Baoshan Iron go up and down completely randomly.
Pair Corralation between Bosera CMSK and Baoshan Iron
Assuming the 90 days trading horizon Bosera CMSK Industrial is expected to under-perform the Baoshan Iron. But the stock apears to be less risky and, when comparing its historical volatility, Bosera CMSK Industrial is 1.39 times less risky than Baoshan Iron. The stock trades about -0.03 of its potential returns per unit of risk. The Baoshan Iron Steel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 609.00 in Baoshan Iron Steel on November 7, 2024 and sell it today you would earn a total of 92.00 from holding Baoshan Iron Steel or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bosera CMSK Industrial vs. Baoshan Iron Steel
Performance |
| Timeline |
| Bosera CMSK Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Baoshan Iron Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Bosera CMSK and Baoshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bosera CMSK and Baoshan Iron
The main advantage of trading using opposite Bosera CMSK and Baoshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bosera CMSK position performs unexpectedly, Baoshan Iron 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 Baoshan Iron will offset losses from the drop in Baoshan Iron's long position.The idea behind Bosera CMSK Industrial and Baoshan Iron Steel 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.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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