Correlation Between Changjiang Jinggong and Shandong Iron
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By analyzing existing cross correlation between Changjiang Jinggong Steel and Shandong Iron and, you can compare the effects of market volatilities on Changjiang Jinggong 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 Changjiang Jinggong with a short position of Shandong Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changjiang Jinggong and Shandong Iron.
Diversification Opportunities for Changjiang Jinggong and Shandong Iron
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Changjiang and Shandong is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Jinggong 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 Changjiang Jinggong 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 Changjiang Jinggong 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 Changjiang Jinggong i.e., Changjiang Jinggong and Shandong Iron go up and down completely randomly.
Pair Corralation between Changjiang Jinggong and Shandong Iron
Assuming the 90 days trading horizon Changjiang Jinggong is expected to generate 2.11 times less return on investment than Shandong Iron. But when comparing it to its historical volatility, Changjiang Jinggong Steel is 1.49 times less risky than Shandong Iron. It trades about 0.07 of its potential returns per unit of risk. Shandong Iron and is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 137.00 in Shandong Iron and on November 4, 2024 and sell it today you would earn a total of 4.00 from holding Shandong Iron and or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changjiang Jinggong Steel vs. Shandong Iron and
Performance |
| Timeline |
| Changjiang Jinggong Steel |
| Shandong Iron |
Changjiang Jinggong and Shandong Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changjiang Jinggong and Shandong Iron
The main advantage of trading using opposite Changjiang Jinggong and Shandong Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changjiang Jinggong 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.The idea behind Changjiang Jinggong Steel and Shandong Iron and 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.
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