Correlation Between Maanshan Iron and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Maanshan Iron and Boston Beer 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 Boston Beer 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 Boston Beer, you can compare the effects of market volatilities on Maanshan Iron and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and Boston Beer.
Diversification Opportunities for Maanshan Iron and Boston Beer
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Maanshan and Boston is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Maanshan Iron i.e., Maanshan Iron and Boston Beer go up and down completely randomly.
Pair Corralation between Maanshan Iron and Boston Beer
Assuming the 90 days horizon Maanshan Iron Steel is expected to under-perform the Boston Beer. In addition to that, Maanshan Iron is 3.75 times more volatile than Boston Beer. It trades about -0.22 of its total potential returns per unit of risk. Boston Beer is currently generating about 0.29 per unit of volatility. If you would invest 29,494 in Boston Beer on September 2, 2024 and sell it today you would earn a total of 2,130 from holding Boston Beer or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maanshan Iron Steel vs. Boston Beer
Performance |
| Timeline |
| Maanshan Iron Steel |
| Boston Beer |
Maanshan Iron and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maanshan Iron and Boston Beer
The main advantage of trading using opposite Maanshan Iron and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maanshan Iron position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| Maanshan Iron vs. ArcelorMittal SA ADR | Maanshan Iron vs. Gerdau SA ADR | Maanshan Iron vs. POSCO Holdings |
| Boston Beer vs. Compania Cervecerias Unidas | Boston Beer vs. Molson Coors Brewing | Boston Beer vs. Suntory Beverage Food | Boston Beer vs. Carlsberg AS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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