Correlation Between Baoshan Iron and Chongqing Shunbo
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By analyzing existing cross correlation between Baoshan Iron Steel and Chongqing Shunbo Aluminum, you can compare the effects of market volatilities on Baoshan Iron and Chongqing Shunbo 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 Chongqing Shunbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Chongqing Shunbo.
Diversification Opportunities for Baoshan Iron and Chongqing Shunbo
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baoshan and Chongqing is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Chongqing Shunbo Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Shunbo Aluminum 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 Chongqing Shunbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Shunbo Aluminum has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Chongqing Shunbo go up and down completely randomly.
Pair Corralation between Baoshan Iron and Chongqing Shunbo
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to under-perform the Chongqing Shunbo. But the stock apears to be less risky and, when comparing its historical volatility, Baoshan Iron Steel is 1.23 times less risky than Chongqing Shunbo. The stock trades about 0.0 of its potential returns per unit of risk. The Chongqing Shunbo Aluminum is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 610.00 in Chongqing Shunbo Aluminum on August 25, 2024 and sell it today you would earn a total of 46.00 from holding Chongqing Shunbo Aluminum or generate 7.54% 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. Chongqing Shunbo Aluminum
Performance |
| Timeline |
| Baoshan Iron Steel |
| Chongqing Shunbo Aluminum |
Baoshan Iron and Chongqing Shunbo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Chongqing Shunbo
The main advantage of trading using opposite Baoshan Iron and Chongqing Shunbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Chongqing Shunbo 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 Chongqing Shunbo will offset losses from the drop in Chongqing Shunbo's long position.| Baoshan Iron vs. Zijin Mining Group | Baoshan Iron vs. Wanhua Chemical Group | Baoshan Iron vs. Shandong Gold Mining | Baoshan Iron vs. Rongsheng Petrochemical Co |
| Chongqing Shunbo vs. Zijin Mining Group | Chongqing Shunbo vs. Wanhua Chemical Group | Chongqing Shunbo vs. Baoshan Iron Steel | Chongqing Shunbo 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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