Correlation Between Baoshan Iron and Malion New

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

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

Diversification Opportunities for Baoshan Iron and Malion New

0.65

Correlation Coefficient

Baoshan Iron  Malion New

Poor diversification

The 3 months correlation between Baoshan and Malion is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Baoshan Iron Steel and Malion New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malion New Materials and Baoshan 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 Baoshan Iron Steel are associated (or correlated) with Malion New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malion New Materials has no effect on the direction of Baoshan Iron i.e., Baoshan Iron and Malion New go up and down completely randomly.

Pair Corralation between Baoshan Iron and Malion New

Assuming the 90 days trading horizon Baoshan Iron is expected to generate 12.88 times less return on investment than Malion New. But when comparing it to its historical volatility, Baoshan Iron Steel is 1.98 times less risky than Malion New. It trades about 0.01 of its potential returns per unit of risk. Malion New Materials is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  633.00  in Malion New Materials on September 30, 2024 and sell it today you would earn a total of  229.00  from holding Malion New Materials or generate 36.18% return on investment over 90 days.

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

Baoshan Iron Steel  vs.  Malion New Materials

Baoshan Iron Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baoshan Iron Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Baoshan Iron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Malion New Materials

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malion New Materials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malion New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baoshan Iron and Malion New

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

The idea behind Baoshan Iron Steel and Malion New Materials 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.