Correlation Between Inner Mongolia and Western Metal
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By analyzing existing cross correlation between Inner Mongolia BaoTou and Western Metal Materials, you can compare the effects of market volatilities on Inner Mongolia and Western Metal 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 Inner Mongolia with a short position of Western Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inner Mongolia and Western Metal.
Diversification Opportunities for Inner Mongolia and Western Metal
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Inner and Western is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Inner Mongolia BaoTou and Western Metal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metal Materials and Inner Mongolia 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 Inner Mongolia BaoTou are associated (or correlated) with Western Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metal Materials has no effect on the direction of Inner Mongolia i.e., Inner Mongolia and Western Metal go up and down completely randomly.
Pair Corralation between Inner Mongolia and Western Metal
Assuming the 90 days trading horizon Inner Mongolia BaoTou is expected to generate 1.22 times more return on investment than Western Metal. However, Inner Mongolia is 1.22 times more volatile than Western Metal Materials. It trades about 0.17 of its potential returns per unit of risk. Western Metal Materials is currently generating about 0.04 per unit of risk. If you would invest 175.00 in Inner Mongolia BaoTou on August 28, 2024 and sell it today you would earn a total of 24.00 from holding Inner Mongolia BaoTou or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inner Mongolia BaoTou vs. Western Metal Materials
Performance |
| Timeline |
| Inner Mongolia BaoTou |
| Western Metal Materials |
Inner Mongolia and Western Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inner Mongolia and Western Metal
The main advantage of trading using opposite Inner Mongolia and Western Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inner Mongolia position performs unexpectedly, Western Metal 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 Metal will offset losses from the drop in Western Metal's long position.| Inner Mongolia vs. Wanhua Chemical Group | Inner Mongolia vs. Shandong Gold Mining | Inner Mongolia vs. Rongsheng Petrochemical Co | Inner Mongolia vs. Jiangxi Ganfeng Lithium |
| Western Metal vs. Zijin Mining Group | Western Metal vs. Wanhua Chemical Group | Western Metal vs. Baoshan Iron Steel | Western Metal vs. Shandong Gold Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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