Correlation Between Anyang Iron and Kangxin New

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

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

Diversification Opportunities for Anyang Iron and Kangxin New

0.79

Correlation Coefficient

Anyang Iron  Kangxin New

Poor diversification

The 3 months correlation between Anyang and Kangxin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Anyang Iron Steel and Kangxin New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangxin New Materials and Anyang 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 Anyang Iron Steel are associated (or correlated) with Kangxin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangxin New Materials has no effect on the direction of Anyang Iron i.e., Anyang Iron and Kangxin New go up and down completely randomly.

Pair Corralation between Anyang Iron and Kangxin New

Assuming the 90 days trading horizon Anyang Iron Steel is expected to generate 0.85 times more return on investment than Kangxin New. However, Anyang Iron Steel is 1.18 times less risky than Kangxin New. It trades about 0.0 of its potential returns per unit of risk. Kangxin New Materials is currently generating about -0.02 per unit of risk. If you would invest  205.00  in Anyang Iron Steel on October 10, 2024 and sell it today you would lose (27.00) from holding Anyang Iron Steel or give up 13.17% of portfolio value over 90 days.

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

Anyang Iron Steel  vs.  Kangxin New Materials

Anyang Iron Steel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anyang Iron Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anyang Iron may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kangxin New Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kangxin New Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kangxin New may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Anyang Iron and Kangxin New

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

The idea behind Anyang Iron Steel and Kangxin 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.