Correlation Between Baoshan Iron and Shandong Iron
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By analyzing existing cross correlation between Baoshan Iron Steel and Shandong Iron and, you can compare the effects of market volatilities on Baoshan Iron and Shandong Iron 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 Shandong Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baoshan Iron and Shandong Iron.
Diversification Opportunities for Baoshan Iron and Shandong Iron
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baoshan and Shandong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Shandong Iron and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Iron 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 Shandong Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Iron has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Shandong Iron go up and down completely randomly.
Pair Corralation between Baoshan Iron and Shandong Iron
Assuming the 90 days trading horizon Baoshan Iron is expected to generate 1.43 times less return on investment than Shandong Iron. But when comparing it to its historical volatility, Baoshan Iron Steel is 1.21 times less risky than Shandong Iron. It trades about 0.04 of its potential returns per unit of risk. Shandong Iron and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 137.00 in Shandong Iron and on September 14, 2024 and sell it today you would earn a total of 30.00 from holding Shandong Iron and or generate 21.9% 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. Shandong Iron and
Performance |
| Timeline |
| Baoshan Iron Steel |
| Shandong Iron |
Baoshan Iron and Shandong Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baoshan Iron and Shandong Iron
The main advantage of trading using opposite Baoshan Iron and Shandong Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baoshan Iron position performs unexpectedly, Shandong Iron 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 Shandong Iron will offset losses from the drop in Shandong Iron'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 |
| Shandong Iron vs. Allied Machinery Co | Shandong Iron vs. Tengda Construction Group | Shandong Iron vs. Tsingtao Brewery Co | Shandong Iron vs. China Life Insurance |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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