Correlation Between BC IRON and Xiwang Special

Can any of the company-specific risk be diversified away by investing in both BC IRON and Xiwang Special 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 BC IRON and Xiwang Special into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BC IRON and Xiwang Special Steel, you can compare the effects of market volatilities on BC IRON and Xiwang Special 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 BC IRON with a short position of Xiwang Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of BC IRON and Xiwang Special.

Diversification Opportunities for BC IRON and Xiwang Special

0.0

Correlation Coefficient

BC IRON  Xiwang Special

Pay attention - limited upside

The 3 months correlation between BC3 and Xiwang is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and Xiwang Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiwang Special Steel and BC 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 BC IRON are associated (or correlated) with Xiwang Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiwang Special Steel has no effect on the direction of BC IRON i.e., BC IRON and Xiwang Special go up and down completely randomly.

Pair Corralation between BC IRON and Xiwang Special

If you would invest  15.00  in BC IRON on October 25, 2024 and sell it today you would earn a total of  2.00  from holding BC IRON or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BC IRON  vs.  Xiwang Special Steel

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BC IRON is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Xiwang Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiwang Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xiwang Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BC IRON and Xiwang Special

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

The idea behind BC IRON and Xiwang Special 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.