Correlation Between GRIPM Advanced and Baoshan Iron

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

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

Diversification Opportunities for GRIPM Advanced and Baoshan Iron

0.76

Correlation Coefficient

GRIPM Advanced  Baoshan Iron

Poor diversification

The 3 months correlation between GRIPM and Baoshan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GRIPM Advanced Materials 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 GRIPM Advanced 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 GRIPM Advanced Materials 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 GRIPM Advanced i.e., GRIPM Advanced and Baoshan Iron go up and down completely randomly.

Pair Corralation between GRIPM Advanced and Baoshan Iron

Assuming the 90 days trading horizon GRIPM Advanced is expected to generate 1.14 times less return on investment than Baoshan Iron. In addition to that, GRIPM Advanced is 1.18 times more volatile than Baoshan Iron Steel. It trades about 0.04 of its total potential returns per unit of risk. Baoshan Iron Steel is currently generating about 0.05 per unit of volatility. If you would invest  704.00  in Baoshan Iron Steel on December 30, 2024 and sell it today you would earn a total of  29.00  from holding Baoshan Iron Steel or generate 4.12% return on investment over 90 days.

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

GRIPM Advanced Materials  vs.  Baoshan Iron Steel

GRIPM Advanced Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRIPM Advanced Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GRIPM Advanced 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baoshan Iron Steel are ranked lower than 3 (%) 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.

Pair Trading with GRIPM Advanced and Baoshan Iron

The main advantage of trading using opposite GRIPM Advanced and Baoshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRIPM Advanced 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 GRIPM Advanced Materials 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.