Correlation Between Baoshan Iron and North Chemical
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By analyzing existing cross correlation between Baoshan Iron Steel and North Chemical Industries, you can compare the effects of market volatilities on Baoshan Iron and North Chemical 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 North Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and North Chemical.
Diversification Opportunities for Baoshan Iron and North Chemical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baoshan and North is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and North Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Chemical Industries 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 North Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Chemical Industries has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and North Chemical go up and down completely randomly.
Pair Corralation between Baoshan Iron and North Chemical
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to under-perform the North Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Baoshan Iron Steel is 2.27 times less risky than North Chemical. The stock trades about -0.03 of its potential returns per unit of risk. The North Chemical Industries is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,095 in North Chemical Industries on September 3, 2024 and sell it today you would earn a total of 143.00 from holding North Chemical Industries or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. North Chemical Industries
Performance |
| Timeline |
| Baoshan Iron Steel |
| North Chemical Industries |
Baoshan Iron and North Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and North Chemical
The main advantage of trading using opposite Baoshan Iron and North Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, North Chemical 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 North Chemical will offset losses from the drop in North Chemical's long position.| Baoshan Iron vs. Zijin Mining Group | Baoshan Iron vs. Wanhua Chemical Group | Baoshan Iron vs. Rongsheng Petrochemical Co | Baoshan Iron vs. Hoshine Silicon Ind |
| North Chemical vs. Shandong Polymer Biochemicals | North Chemical vs. Ningxia Younglight Chemicals | North Chemical vs. Miracll Chemicals Co | North Chemical vs. Shuhua Sports Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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