Correlation Between MAANSHAN IRON and Discover Financial
Can any of the company-specific risk be diversified away by investing in both MAANSHAN IRON and Discover Financial 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 Discover Financial 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 Discover Financial Services, you can compare the effects of market volatilities on MAANSHAN IRON and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAANSHAN IRON and Discover Financial.
Diversification Opportunities for MAANSHAN IRON and Discover Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAANSHAN and Discover is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MAANSHAN IRON H and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of MAANSHAN IRON i.e., MAANSHAN IRON and Discover Financial go up and down completely randomly.
Pair Corralation between MAANSHAN IRON and Discover Financial
Assuming the 90 days trading horizon MAANSHAN IRON H is expected to generate 2.73 times more return on investment than Discover Financial. However, MAANSHAN IRON is 2.73 times more volatile than Discover Financial Services. It trades about 0.26 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.24 per unit of risk. If you would invest 17.00 in MAANSHAN IRON H on October 25, 2024 and sell it today you would earn a total of 4.00 from holding MAANSHAN IRON H or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAANSHAN IRON H vs. Discover Financial Services
Performance |
| Timeline |
| MAANSHAN IRON H |
| Discover Financial |
MAANSHAN IRON and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAANSHAN IRON and Discover Financial
The main advantage of trading using opposite MAANSHAN IRON and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAANSHAN IRON position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| MAANSHAN IRON vs. Apple Inc | MAANSHAN IRON vs. Apple Inc | MAANSHAN IRON vs. Apple Inc | MAANSHAN IRON vs. Apple Inc |
| Discover Financial vs. ANGANG STEEL H | Discover Financial vs. CVR Medical Corp | Discover Financial vs. MAANSHAN IRON H | Discover Financial vs. Inspire Medical Systems |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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