Correlation Between Summit Materials and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Maanshan Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Maanshan Iron Steel, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Maanshan Iron.
Diversification Opportunities for Summit Materials and Maanshan Iron
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Maanshan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials 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 Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Maanshan Iron go up and down completely randomly.
Pair Corralation between Summit Materials and Maanshan Iron
Considering the 90-day investment horizon Summit Materials is expected to generate 0.43 times more return on investment than Maanshan Iron. However, Summit Materials is 2.31 times less risky than Maanshan Iron. It trades about 0.08 of its potential returns per unit of risk. Maanshan Iron Steel is currently generating about 0.0 per unit of risk. If you would invest 3,387 in Summit Materials on September 1, 2024 and sell it today you would earn a total of 1,707 from holding Summit Materials or generate 50.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Maanshan Iron Steel
Performance |
| Timeline |
| Summit Materials |
| Maanshan Iron Steel |
Summit Materials and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Maanshan Iron
The main advantage of trading using opposite Summit Materials and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
| Maanshan Iron vs. Olympic Steel | Maanshan Iron vs. POSCO Holdings | Maanshan Iron vs. Steel Dynamics | Maanshan Iron vs. Universal Stainless Alloy |
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 CEOs Directory module to screen CEOs from public companies around the world.
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