Correlation Between Shandong Iron and Grandblue Environment

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

By analyzing existing cross correlation between Shandong Iron and and Grandblue Environment Co, you can compare the effects of market volatilities on Shandong Iron and Grandblue Environment 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 Shandong Iron with a short position of Grandblue Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Iron and Grandblue Environment.

Diversification Opportunities for Shandong Iron and Grandblue Environment

0.42

Correlation Coefficient

Shandong Iron  Grandblue Environment

Very weak diversification

The 3 months correlation between Shandong and Grandblue is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Iron and and Grandblue Environment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandblue Environment and Shandong 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 Shandong Iron and are associated (or correlated) with Grandblue Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandblue Environment has no effect on the direction of Shandong Iron i.e., Shandong Iron and Grandblue Environment go up and down completely randomly.

Pair Corralation between Shandong Iron and Grandblue Environment

Assuming the 90 days trading horizon Shandong Iron and is expected to under-perform the Grandblue Environment. But the stock apears to be less risky and, when comparing its historical volatility, Shandong Iron and is 1.19 times less risky than Grandblue Environment. The stock trades about -0.08 of its potential returns per unit of risk. The Grandblue Environment Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,340  in Grandblue Environment Co on December 27, 2024 and sell it today you would lose (45.00) from holding Grandblue Environment Co or give up 1.92% of portfolio value over 90 days.

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

Shandong Iron and  vs.  Grandblue Environment Co

Shandong Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Iron and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grandblue Environment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shandong Iron and Grandblue Environment

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

The idea behind Shandong Iron and and Grandblue Environment Co 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.