Correlation Between Maanshan Iron and Black Hills
Can any of the company-specific risk be diversified away by investing in both Maanshan Iron and Black Hills at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Maanshan Iron and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maanshan Iron Steel and Black Hills, you can compare the effects of market volatilities on Maanshan Iron and Black Hills 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 Maanshan Iron with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and Black Hills.
Diversification Opportunities for Maanshan Iron and Black Hills
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maanshan and Black is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and Maanshan 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 Maanshan Iron Steel are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Maanshan Iron i.e., Maanshan Iron and Black Hills go up and down completely randomly.
Pair Corralation between Maanshan Iron and Black Hills
Assuming the 90 days horizon Maanshan Iron is expected to generate 13.89 times less return on investment than Black Hills. In addition to that, Maanshan Iron is 2.69 times more volatile than Black Hills. It trades about 0.0 of its total potential returns per unit of risk. Black Hills is currently generating about 0.01 per unit of volatility. If you would invest 6,375 in Black Hills on August 28, 2024 and sell it today you would earn a total of 91.00 from holding Black Hills or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maanshan Iron Steel vs. Black Hills
Performance |
| Timeline |
| Maanshan Iron Steel |
| Black Hills |
Maanshan Iron and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maanshan Iron and Black Hills
The main advantage of trading using opposite Maanshan Iron and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maanshan Iron position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Maanshan Iron vs. Olympic Steel | Maanshan Iron vs. Mesabi Trust | Maanshan Iron vs. Universal Stainless Alloy | Maanshan Iron vs. POSCO Holdings |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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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