Correlation Between Baoshan Iron and Tangshan Jidong
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By analyzing existing cross correlation between Baoshan Iron Steel and Tangshan Jidong Cement, you can compare the effects of market volatilities on Baoshan Iron and Tangshan Jidong 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 Baoshan Iron with a short position of Tangshan Jidong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Tangshan Jidong.
Diversification Opportunities for Baoshan Iron and Tangshan Jidong
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baoshan and Tangshan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Tangshan Jidong Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangshan Jidong Cement and Baoshan Iron 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 Baoshan Iron Steel are associated (or correlated) with Tangshan Jidong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangshan Jidong Cement has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Tangshan Jidong go up and down completely randomly.
Pair Corralation between Baoshan Iron and Tangshan Jidong
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to generate 0.83 times more return on investment than Tangshan Jidong. However, Baoshan Iron Steel is 1.21 times less risky than Tangshan Jidong. It trades about -0.03 of its potential returns per unit of risk. Tangshan Jidong Cement is currently generating about -0.07 per unit of risk. If you would invest 669.00 in Baoshan Iron Steel on September 3, 2024 and sell it today you would lose (7.00) from holding Baoshan Iron Steel or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. Tangshan Jidong Cement
Performance |
| Timeline |
| Baoshan Iron Steel |
| Tangshan Jidong Cement |
Baoshan Iron and Tangshan Jidong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Tangshan Jidong
The main advantage of trading using opposite Baoshan Iron and Tangshan Jidong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Tangshan Jidong 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 Tangshan Jidong will offset losses from the drop in Tangshan Jidong's long position.The idea behind Baoshan Iron Steel and Tangshan Jidong Cement 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.| Tangshan Jidong vs. Zijin Mining Group | Tangshan Jidong vs. Baoshan Iron Steel | Tangshan Jidong vs. Hoshine Silicon Ind |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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