Correlation Between NI Holdings and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Maanshan Iron 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 NI Holdings and Maanshan Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Maanshan Iron Steel, you can compare the effects of market volatilities on NI Holdings and Maanshan 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 NI Holdings with a short position of Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Maanshan Iron.
Diversification Opportunities for NI Holdings and Maanshan Iron
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NODK and Maanshan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Maanshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maanshan Iron Steel and NI Holdings 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 NI Holdings are associated (or correlated) with Maanshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maanshan Iron Steel has no effect on the direction of NI Holdings i.e., NI Holdings and Maanshan Iron go up and down completely randomly.
Pair Corralation between NI Holdings and Maanshan Iron
Given the investment horizon of 90 days NI Holdings is expected to generate 2.07 times less return on investment than Maanshan Iron. But when comparing it to its historical volatility, NI Holdings is 2.45 times less risky than Maanshan Iron. It trades about 0.1 of its potential returns per unit of risk. Maanshan Iron Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Maanshan Iron Steel on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Maanshan Iron Steel or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Maanshan Iron Steel
Performance |
| Timeline |
| NI Holdings |
| Maanshan Iron Steel |
NI Holdings and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Maanshan Iron
The main advantage of trading using opposite NI Holdings and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Maanshan 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 Maanshan Iron will offset losses from the drop in Maanshan Iron's long position.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
| Maanshan Iron vs. Olympic Steel | Maanshan Iron vs. Mesabi Trust | Maanshan Iron vs. Universal Stainless Alloy | Maanshan Iron vs. POSCO Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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