Correlation Between ANGANG STEEL and BC IRON

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

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

Diversification Opportunities for ANGANG STEEL and BC IRON

-0.84

Correlation Coefficient

ANGANG STEEL  BC IRON

Pay attention - limited upside

The 3 months correlation between ANGANG and BC3 is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ANGANG STEEL H and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON and ANGANG STEEL 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 ANGANG STEEL H are associated (or correlated) with BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of ANGANG STEEL i.e., ANGANG STEEL and BC IRON go up and down completely randomly.

Pair Corralation between ANGANG STEEL and BC IRON

Assuming the 90 days trading horizon ANGANG STEEL H is expected to generate 1.53 times more return on investment than BC IRON. However, ANGANG STEEL is 1.53 times more volatile than BC IRON. It trades about 0.13 of its potential returns per unit of risk. BC IRON is currently generating about -0.09 per unit of risk. If you would invest  18.00  in ANGANG STEEL H on December 21, 2024 and sell it today you would earn a total of  5.00  from holding ANGANG STEEL H or generate 27.78% return on investment over 90 days.

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

ANGANG STEEL H   vs.  BC IRON

ANGANG STEEL H

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ANGANG STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

BC IRON

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ANGANG STEEL and BC IRON

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

The idea behind ANGANG STEEL H and BC IRON 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.