Correlation Between Imeik Technology and Baoshan Iron

Can any of the company-specific risk be diversified away by investing in both Imeik Technology and Baoshan 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 Imeik Technology and Baoshan Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Imeik Technology Development and Baoshan Iron Steel, you can compare the effects of market volatilities on Imeik Technology and Baoshan 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 Imeik Technology with a short position of Baoshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imeik Technology and Baoshan Iron.

Diversification Opportunities for Imeik Technology and Baoshan Iron

0.33

Correlation Coefficient

Imeik Technology  Baoshan Iron

Weak diversification

The 3 months correlation between Imeik and Baoshan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Imeik Technology Development and Baoshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baoshan Iron Steel and Imeik Technology 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 Imeik Technology Development are associated (or correlated) with Baoshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baoshan Iron Steel has no effect on the direction of Imeik Technology i.e., Imeik Technology and Baoshan Iron go up and down completely randomly.

Pair Corralation between Imeik Technology and Baoshan Iron

Assuming the 90 days trading horizon Imeik Technology Development is expected to under-perform the Baoshan Iron. In addition to that, Imeik Technology is 1.79 times more volatile than Baoshan Iron Steel. It trades about -0.03 of its total potential returns per unit of risk. Baoshan Iron Steel is currently generating about 0.07 per unit of volatility. If you would invest  711.00  in Baoshan Iron Steel on December 25, 2024 and sell it today you would earn a total of  42.00  from holding Baoshan Iron Steel or generate 5.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Imeik Technology Development  vs.  Baoshan Iron Steel

Imeik Technology Dev

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imeik Technology Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Imeik Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baoshan Iron Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baoshan Iron Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Baoshan Iron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Imeik Technology and Baoshan Iron

The main advantage of trading using opposite Imeik Technology and Baoshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imeik Technology position performs unexpectedly, Baoshan 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 Baoshan Iron will offset losses from the drop in Baoshan Iron's long position.

The idea behind Imeik Technology Development and Baoshan Iron Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.