Correlation Between Baoshan Iron and Guizhou Chanhen
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By analyzing existing cross correlation between Baoshan Iron Steel and Guizhou Chanhen Chemical, you can compare the effects of market volatilities on Baoshan Iron and Guizhou Chanhen 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 Guizhou Chanhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Guizhou Chanhen.
Diversification Opportunities for Baoshan Iron and Guizhou Chanhen
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baoshan and Guizhou is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Guizhou Chanhen Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou Chanhen 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 Guizhou Chanhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou Chanhen Chemical has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Guizhou Chanhen go up and down completely randomly.
Pair Corralation between Baoshan Iron and Guizhou Chanhen
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to generate 0.67 times more return on investment than Guizhou Chanhen. However, Baoshan Iron Steel is 1.48 times less risky than Guizhou Chanhen. It trades about 0.02 of its potential returns per unit of risk. Guizhou Chanhen Chemical is currently generating about 0.0 per unit of risk. If you would invest 580.00 in Baoshan Iron Steel on August 28, 2024 and sell it today you would earn a total of 72.00 from holding Baoshan Iron Steel or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. Guizhou Chanhen Chemical
Performance |
| Timeline |
| Baoshan Iron Steel |
| Guizhou Chanhen Chemical |
Baoshan Iron and Guizhou Chanhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Guizhou Chanhen
The main advantage of trading using opposite Baoshan Iron and Guizhou Chanhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Guizhou Chanhen 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 Guizhou Chanhen will offset losses from the drop in Guizhou Chanhen'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 |
| Guizhou Chanhen vs. Zijin Mining Group | Guizhou Chanhen vs. Wanhua Chemical Group | Guizhou Chanhen vs. Baoshan Iron Steel | Guizhou Chanhen 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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