Correlation Between Shandong Iron and Inner Mongolia
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By analyzing existing cross correlation between Shandong Iron and and Inner Mongolia Dazhong, you can compare the effects of market volatilities on Shandong Iron and Inner Mongolia 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 Shandong Iron with a short position of Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Iron and Inner Mongolia.
Diversification Opportunities for Shandong Iron and Inner Mongolia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Inner is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Iron and and Inner Mongolia Dazhong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Dazhong and Shandong 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 Shandong Iron and are associated (or correlated) with Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Dazhong has no effect on the direction of Shandong Iron i.e., Shandong Iron and Inner Mongolia go up and down completely randomly.
Pair Corralation between Shandong Iron and Inner Mongolia
Assuming the 90 days trading horizon Shandong Iron and is expected to under-perform the Inner Mongolia. In addition to that, Shandong Iron is 1.45 times more volatile than Inner Mongolia Dazhong. It trades about -0.27 of its total potential returns per unit of risk. Inner Mongolia Dazhong is currently generating about -0.36 per unit of volatility. If you would invest 909.00 in Inner Mongolia Dazhong on October 25, 2024 and sell it today you would lose (82.00) from holding Inner Mongolia Dazhong or give up 9.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Iron and vs. Inner Mongolia Dazhong
Performance |
| Timeline |
| Shandong Iron |
| Inner Mongolia Dazhong |
Shandong Iron and Inner Mongolia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Iron and Inner Mongolia
The main advantage of trading using opposite Shandong Iron and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Iron position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.| Shandong Iron vs. Zijin Mining Group | Shandong Iron vs. Wanhua Chemical Group | Shandong Iron vs. Baoshan Iron Steel | Shandong Iron vs. Rongsheng Petrochemical Co |
| Inner Mongolia vs. Changjiang Jinggong Steel | Inner Mongolia vs. Gem Year Industrial Co | Inner Mongolia vs. Wuxi Xuelang Environmental | Inner Mongolia vs. Dynagreen Environmental Protection |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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