Correlation Between Baoshan Iron and Inner Mongolia
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By analyzing existing cross correlation between Baoshan Iron Steel and Inner Mongolia Dazhong, you can compare the effects of market volatilities on Baoshan Iron and Inner Mongolia 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 Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Inner Mongolia.
Diversification Opportunities for Baoshan Iron and Inner Mongolia
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baoshan and Inner is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Inner Mongolia Dazhong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Dazhong 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Dazhong has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Inner Mongolia go up and down completely randomly.
Pair Corralation between Baoshan Iron and Inner Mongolia
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to generate 0.82 times more return on investment than Inner Mongolia. However, Baoshan Iron Steel is 1.23 times less risky than Inner Mongolia. It trades about -0.01 of its potential returns per unit of risk. Inner Mongolia Dazhong is currently generating about 0.0 per unit of risk. If you would invest 705.00 in Baoshan Iron Steel on September 3, 2024 and sell it today you would lose (27.00) from holding Baoshan Iron Steel or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. Inner Mongolia Dazhong
Performance |
| Timeline |
| Baoshan Iron Steel |
| Inner Mongolia Dazhong |
Baoshan Iron and Inner Mongolia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Inner Mongolia
The main advantage of trading using opposite Baoshan Iron and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.The idea behind Baoshan Iron Steel and Inner Mongolia Dazhong 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.| Inner Mongolia vs. Xiangyu Medical Co | Inner Mongolia vs. Quectel Wireless Solutions | Inner Mongolia vs. Cofoe Medical Technology | Inner Mongolia vs. Allmed Medical Products |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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