Correlation Between Baoshan Iron and Hangzhou Gaoxin
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By analyzing existing cross correlation between Baoshan Iron Steel and Hangzhou Gaoxin Rubber, you can compare the effects of market volatilities on Baoshan Iron and Hangzhou Gaoxin 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 Hangzhou Gaoxin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Hangzhou Gaoxin.
Diversification Opportunities for Baoshan Iron and Hangzhou Gaoxin
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Baoshan and Hangzhou is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Hangzhou Gaoxin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Gaoxin Rubber 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 Hangzhou Gaoxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Gaoxin Rubber has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Hangzhou Gaoxin go up and down completely randomly.
Pair Corralation between Baoshan Iron and Hangzhou Gaoxin
Assuming the 90 days trading horizon Baoshan Iron is expected to generate 2.77 times less return on investment than Hangzhou Gaoxin. But when comparing it to its historical volatility, Baoshan Iron Steel is 1.96 times less risky than Hangzhou Gaoxin. It trades about 0.05 of its potential returns per unit of risk. Hangzhou Gaoxin Rubber is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 724.00 in Hangzhou Gaoxin Rubber on November 7, 2024 and sell it today you would earn a total of 203.00 from holding Hangzhou Gaoxin Rubber or generate 28.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. Hangzhou Gaoxin Rubber
Performance |
| Timeline |
| Baoshan Iron Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Hangzhou Gaoxin Rubber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Baoshan Iron and Hangzhou Gaoxin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Hangzhou Gaoxin
The main advantage of trading using opposite Baoshan Iron and Hangzhou Gaoxin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Hangzhou Gaoxin 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 Hangzhou Gaoxin will offset losses from the drop in Hangzhou Gaoxin's long position.The idea behind Baoshan Iron Steel and Hangzhou Gaoxin Rubber 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 Stocks Directory module to find actively traded stocks across global markets.
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