Correlation Between MAANSHAN IRON and Transcontinental
Can any of the company-specific risk be diversified away by investing in both MAANSHAN IRON and Transcontinental 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 Transcontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAANSHAN IRON H and Transcontinental, you can compare the effects of market volatilities on MAANSHAN IRON and Transcontinental 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 Transcontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAANSHAN IRON and Transcontinental.
Diversification Opportunities for MAANSHAN IRON and Transcontinental
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAANSHAN and Transcontinental is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MAANSHAN IRON H and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental 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 H are associated (or correlated) with Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of MAANSHAN IRON i.e., MAANSHAN IRON and Transcontinental go up and down completely randomly.
Pair Corralation between MAANSHAN IRON and Transcontinental
Assuming the 90 days trading horizon MAANSHAN IRON H is expected to generate 3.61 times more return on investment than Transcontinental. However, MAANSHAN IRON is 3.61 times more volatile than Transcontinental. It trades about 0.19 of its potential returns per unit of risk. Transcontinental is currently generating about -0.07 per unit of risk. If you would invest 18.00 in MAANSHAN IRON H on November 6, 2024 and sell it today you would earn a total of 3.00 from holding MAANSHAN IRON H or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
MAANSHAN IRON H vs. Transcontinental
Performance |
| Timeline |
| MAANSHAN IRON H |
| Transcontinental |
MAANSHAN IRON and Transcontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAANSHAN IRON and Transcontinental
The main advantage of trading using opposite MAANSHAN IRON and Transcontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAANSHAN IRON position performs unexpectedly, Transcontinental 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 Transcontinental will offset losses from the drop in Transcontinental's long position.| MAANSHAN IRON vs. Nomad Foods | MAANSHAN IRON vs. Suntory Beverage Food | MAANSHAN IRON vs. BOSTON BEER A | MAANSHAN IRON vs. PATTIES FOODS |
| Transcontinental vs. INTERCONT HOTELS | Transcontinental vs. InterContinental Hotels Group | Transcontinental vs. Sunstone Hotel Investors | Transcontinental vs. Regal Hotels International |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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