Correlation Between ANGANG STEEL and Rayonier

Can any of the company-specific risk be diversified away by investing in both ANGANG STEEL and Rayonier 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 Rayonier 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 Rayonier, you can compare the effects of market volatilities on ANGANG STEEL and Rayonier 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 Rayonier. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGANG STEEL and Rayonier.

Diversification Opportunities for ANGANG STEEL and Rayonier

0.04

Correlation Coefficient

ANGANG STEEL  Rayonier

Significant diversification

The 3 months correlation between ANGANG and Rayonier is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ANGANG STEEL H and Rayonier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier 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 Rayonier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayonier has no effect on the direction of ANGANG STEEL i.e., ANGANG STEEL and Rayonier go up and down completely randomly.

Pair Corralation between ANGANG STEEL and Rayonier

Assuming the 90 days trading horizon ANGANG STEEL H is expected to generate 2.33 times more return on investment than Rayonier. However, ANGANG STEEL is 2.33 times more volatile than Rayonier. It trades about -0.03 of its potential returns per unit of risk. Rayonier is currently generating about -0.09 per unit of risk. If you would invest  18.00  in ANGANG STEEL H on October 11, 2024 and sell it today you would lose (1.00) from holding ANGANG STEEL H or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

ANGANG STEEL H   vs.  Rayonier

ANGANG STEEL H

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ANGANG STEEL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Rayonier

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ANGANG STEEL and Rayonier

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

The idea behind ANGANG STEEL H and Rayonier 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.