Correlation Between Baoshan Iron and Lier Chemical
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By analyzing existing cross correlation between Baoshan Iron Steel and Lier Chemical Co, you can compare the effects of market volatilities on Baoshan Iron and Lier 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 Lier Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Lier Chemical.
Diversification Opportunities for Baoshan Iron and Lier Chemical
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baoshan and Lier is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Lier Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lier Chemical 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 Lier Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lier Chemical has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Lier Chemical go up and down completely randomly.
Pair Corralation between Baoshan Iron and Lier Chemical
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to generate 0.77 times more return on investment than Lier Chemical. However, Baoshan Iron Steel is 1.3 times less risky than Lier Chemical. It trades about 0.03 of its potential returns per unit of risk. Lier Chemical Co is currently generating about -0.04 per unit of risk. If you would invest 617.00 in Baoshan Iron Steel on September 4, 2024 and sell it today you would earn a total of 65.00 from holding Baoshan Iron Steel or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. Lier Chemical Co
Performance |
| Timeline |
| Baoshan Iron Steel |
| Lier Chemical |
Baoshan Iron and Lier Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Lier Chemical
The main advantage of trading using opposite Baoshan Iron and Lier Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Lier 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 Lier Chemical will offset losses from the drop in Lier 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. Shandong Gold Mining |
| Lier Chemical vs. Zijin Mining Group | Lier Chemical vs. Wanhua Chemical Group | Lier Chemical vs. Baoshan Iron Steel | Lier Chemical vs. Rongsheng Petrochemical 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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