Correlation Between Inner Mongolia and Western Mining
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By analyzing existing cross correlation between Inner Mongolia BaoTou and Western Mining Co, you can compare the effects of market volatilities on Inner Mongolia and Western 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 Inner Mongolia with a short position of Western Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inner Mongolia and Western Mining.
Diversification Opportunities for Inner Mongolia and Western Mining
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inner and Western is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Inner Mongolia BaoTou and Western Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Mining 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 Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Mining has no effect on the direction of Inner Mongolia i.e., Inner Mongolia and Western Mining go up and down completely randomly.
Pair Corralation between Inner Mongolia and Western Mining
Assuming the 90 days trading horizon Inner Mongolia is expected to generate 57.44 times less return on investment than Western Mining. But when comparing it to its historical volatility, Inner Mongolia BaoTou is 1.32 times less risky than Western Mining. It trades about 0.0 of its potential returns per unit of risk. Western Mining Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,014 in Western Mining Co on August 27, 2024 and sell it today you would earn a total of 681.00 from holding Western Mining Co or generate 67.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inner Mongolia BaoTou vs. Western Mining Co
Performance |
| Timeline |
| Inner Mongolia BaoTou |
| Western Mining |
Inner Mongolia and Western Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inner Mongolia and Western Mining
The main advantage of trading using opposite Inner Mongolia and Western Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inner Mongolia position performs unexpectedly, Western 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 Western Mining will offset losses from the drop in Western Mining'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 Mining vs. Zijin Mining Group | Western Mining vs. Wanhua Chemical Group | Western Mining vs. Baoshan Iron Steel | Western Mining 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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