Correlation Between Maanshan Iron and Globalfoundries
Can any of the company-specific risk be diversified away by investing in both Maanshan Iron and Globalfoundries 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 Globalfoundries 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 Globalfoundries, you can compare the effects of market volatilities on Maanshan Iron and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and Globalfoundries.
Diversification Opportunities for Maanshan Iron and Globalfoundries
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Maanshan and Globalfoundries is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Maanshan Iron i.e., Maanshan Iron and Globalfoundries go up and down completely randomly.
Pair Corralation between Maanshan Iron and Globalfoundries
Assuming the 90 days horizon Maanshan Iron Steel is expected to under-perform the Globalfoundries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Maanshan Iron Steel is 1.19 times less risky than Globalfoundries. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Globalfoundries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,072 in Globalfoundries on August 30, 2024 and sell it today you would earn a total of 213.00 from holding Globalfoundries or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maanshan Iron Steel vs. Globalfoundries
Performance |
| Timeline |
| Maanshan Iron Steel |
| Globalfoundries |
Maanshan Iron and Globalfoundries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maanshan Iron and Globalfoundries
The main advantage of trading using opposite Maanshan Iron and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maanshan Iron position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.| Maanshan Iron vs. ArcelorMittal SA ADR | Maanshan Iron vs. Gerdau SA ADR | Maanshan Iron vs. POSCO Holdings |
| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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