Correlation Between Maanshan Iron and NiSource
Can any of the company-specific risk be diversified away by investing in both Maanshan Iron and NiSource 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 NiSource 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 NiSource, you can compare the effects of market volatilities on Maanshan Iron and NiSource 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 NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and NiSource.
Diversification Opportunities for Maanshan Iron and NiSource
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maanshan and NiSource is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Maanshan Iron i.e., Maanshan Iron and NiSource go up and down completely randomly.
Pair Corralation between Maanshan Iron and NiSource
Assuming the 90 days horizon Maanshan Iron Steel is expected to under-perform the NiSource. In addition to that, Maanshan Iron is 3.66 times more volatile than NiSource. It trades about -0.21 of its total potential returns per unit of risk. NiSource is currently generating about 0.36 per unit of volatility. If you would invest 3,487 in NiSource on August 29, 2024 and sell it today you would earn a total of 338.00 from holding NiSource or generate 9.69% 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. NiSource
Performance |
| Timeline |
| Maanshan Iron Steel |
| NiSource |
Maanshan Iron and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maanshan Iron and NiSource
The main advantage of trading using opposite Maanshan Iron and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maanshan Iron position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource's long position.| Maanshan Iron vs. ArcelorMittal SA ADR | Maanshan Iron vs. Gerdau SA ADR | Maanshan Iron vs. POSCO Holdings |
| NiSource vs. NewJersey Resources | NiSource vs. UGI Corporation | NiSource vs. Spire Inc | NiSource vs. Chesapeake Utilities |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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