Correlation Between Baoshan Iron and Ligao Foods
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By analyzing existing cross correlation between Baoshan Iron Steel and Ligao Foods CoLtd, you can compare the effects of market volatilities on Baoshan Iron and Ligao Foods 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 Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Ligao Foods.
Diversification Opportunities for Baoshan Iron and Ligao Foods
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baoshan and Ligao is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd 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 Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Ligao Foods go up and down completely randomly.
Pair Corralation between Baoshan Iron and Ligao Foods
Assuming the 90 days trading horizon Baoshan Iron Steel is expected to generate 0.56 times more return on investment than Ligao Foods. However, Baoshan Iron Steel is 1.79 times less risky than Ligao Foods. It trades about 0.03 of its potential returns per unit of risk. Ligao Foods CoLtd is currently generating about -0.04 per unit of risk. If you would invest 630.00 in Baoshan Iron Steel on December 12, 2024 and sell it today you would earn a total of 121.00 from holding Baoshan Iron Steel or generate 19.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baoshan Iron Steel vs. Ligao Foods CoLtd
Performance |
| Timeline |
| Baoshan Iron Steel |
| Ligao Foods CoLtd |
Baoshan Iron and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Ligao Foods
The main advantage of trading using opposite Baoshan Iron and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.| Baoshan Iron vs. Shandong Publishing Media | ||
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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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