Correlation Between Aofu Environmental and Baoshan Iron
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By analyzing existing cross correlation between Aofu Environmental Technology and Baoshan Iron Steel, you can compare the effects of market volatilities on Aofu Environmental and Baoshan 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 Aofu Environmental with a short position of Baoshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aofu Environmental and Baoshan Iron.
Diversification Opportunities for Aofu Environmental and Baoshan Iron
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aofu and Baoshan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aofu Environmental Technology and Baoshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baoshan Iron Steel and Aofu Environmental 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 Aofu Environmental Technology are associated (or correlated) with Baoshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baoshan Iron Steel has no effect on the direction of Aofu Environmental i.e., Aofu Environmental and Baoshan Iron go up and down completely randomly.
Pair Corralation between Aofu Environmental and Baoshan Iron
Assuming the 90 days trading horizon Aofu Environmental Technology is expected to under-perform the Baoshan Iron. In addition to that, Aofu Environmental is 2.21 times more volatile than Baoshan Iron Steel. It trades about -0.04 of its total potential returns per unit of risk. Baoshan Iron Steel is currently generating about 0.03 per unit of volatility. If you would invest 617.00 in Baoshan Iron Steel on September 4, 2024 and sell it today you would earn a total of 65.00 from holding Baoshan Iron Steel or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aofu Environmental Technology vs. Baoshan Iron Steel
Performance |
| Timeline |
| Aofu Environmental |
| Baoshan Iron Steel |
Aofu Environmental and Baoshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aofu Environmental and Baoshan Iron
The main advantage of trading using opposite Aofu Environmental and Baoshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aofu Environmental position performs unexpectedly, Baoshan 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 Baoshan Iron will offset losses from the drop in Baoshan Iron's long position.| Aofu Environmental vs. Shanghai Metersbonwe FashionAccessories | Aofu Environmental vs. Yingde Greatchem Chemicals | Aofu Environmental vs. Dymatic Chemicals | Aofu Environmental vs. China Publishing Media |
| Baoshan Iron vs. Zijin Mining Group | Baoshan Iron vs. Wanhua Chemical Group | Baoshan Iron vs. Rongsheng Petrochemical Co | Baoshan Iron vs. Shandong Gold Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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