Correlation Between Baoshan Iron and Shanxi Tond
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By analyzing existing cross correlation between Baoshan Iron Steel and Shanxi Tond Chemical, you can compare the effects of market volatilities on Baoshan Iron and Shanxi Tond 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 Shanxi Tond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Shanxi Tond.
Diversification Opportunities for Baoshan Iron and Shanxi Tond
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baoshan and Shanxi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Shanxi Tond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Tond 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 Shanxi Tond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Tond Chemical has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Shanxi Tond go up and down completely randomly.
Pair Corralation between Baoshan Iron and Shanxi Tond
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to generate 0.55 times more return on investment than Shanxi Tond. However, Baoshan Iron Steel is 1.81 times less risky than Shanxi Tond. It trades about 0.23 of its potential returns per unit of risk. Shanxi Tond Chemical is currently generating about -0.04 per unit of risk. If you would invest 656.00 in Baoshan Iron Steel on September 25, 2024 and sell it today you would earn a total of 46.00 from holding Baoshan Iron Steel or generate 7.01% 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. Shanxi Tond Chemical
Performance |
| Timeline |
| Baoshan Iron Steel |
| Shanxi Tond Chemical |
Baoshan Iron and Shanxi Tond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Shanxi Tond
The main advantage of trading using opposite Baoshan Iron and Shanxi Tond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Shanxi Tond 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 Shanxi Tond will offset losses from the drop in Shanxi Tond's long position.| Baoshan Iron vs. Wanhua Chemical Group | Baoshan Iron vs. Shandong Gold Mining | Baoshan Iron vs. Rongsheng Petrochemical Co | Baoshan Iron vs. Inner Mongolia BaoTou |
| Shanxi Tond vs. Zijin Mining Group | Shanxi Tond vs. Wanhua Chemical Group | Shanxi Tond vs. Baoshan Iron Steel | Shanxi Tond 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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