Correlation Between Baoshan Iron and Shanghai Phichem
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By analyzing existing cross correlation between Baoshan Iron Steel and Shanghai Phichem Material, you can compare the effects of market volatilities on Baoshan Iron and Shanghai Phichem 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 Shanghai Phichem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Shanghai Phichem.
Diversification Opportunities for Baoshan Iron and Shanghai Phichem
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baoshan and Shanghai is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Shanghai Phichem Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Phichem Material 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 Shanghai Phichem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Phichem Material has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Shanghai Phichem go up and down completely randomly.
Pair Corralation between Baoshan Iron and Shanghai Phichem
Assuming the 90 days trading horizon Baoshan Iron is expected to generate 4.57 times less return on investment than Shanghai Phichem. In addition to that, Baoshan Iron is 1.06 times more volatile than Shanghai Phichem Material. It trades about 0.05 of its total potential returns per unit of risk. Shanghai Phichem Material is currently generating about 0.26 per unit of volatility. If you would invest 1,470 in Shanghai Phichem Material on November 7, 2024 and sell it today you would earn a total of 115.00 from holding Shanghai Phichem Material or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. Shanghai Phichem Material
Performance |
| Timeline |
| Baoshan Iron Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Shanghai Phichem Material |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Baoshan Iron and Shanghai Phichem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Shanghai Phichem
The main advantage of trading using opposite Baoshan Iron and Shanghai Phichem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Shanghai Phichem 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 Shanghai Phichem will offset losses from the drop in Shanghai Phichem's long position.The idea behind Baoshan Iron Steel and Shanghai Phichem Material pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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