Correlation Between ANGANG STEEL and MAANSHAN IRON

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

Diversification Opportunities for ANGANG STEEL and MAANSHAN IRON

-0.06

Correlation Coefficient

ANGANG STEEL  MAANSHAN IRON

Good diversification

The 3 months correlation between ANGANG and MAANSHAN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ANGANG STEEL H and MAANSHAN IRON H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAANSHAN IRON H 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 MAANSHAN IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAANSHAN IRON H has no effect on the direction of ANGANG STEEL i.e., ANGANG STEEL and MAANSHAN IRON go up and down completely randomly.

Pair Corralation between ANGANG STEEL and MAANSHAN IRON

Assuming the 90 days trading horizon ANGANG STEEL is expected to generate 501.0 times less return on investment than MAANSHAN IRON. But when comparing it to its historical volatility, ANGANG STEEL H is 1.19 times less risky than MAANSHAN IRON. It trades about 0.0 of its potential returns per unit of risk. MAANSHAN IRON H is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  14.00  in MAANSHAN IRON H on October 24, 2024 and sell it today you would earn a total of  7.00  from holding MAANSHAN IRON H or generate 50.0% return on investment over 90 days.

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

ANGANG STEEL H   vs.  MAANSHAN IRON H

ANGANG STEEL H

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ANGANG STEEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MAANSHAN IRON H

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAANSHAN IRON H are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, MAANSHAN IRON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANGANG STEEL and MAANSHAN IRON

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

The idea behind ANGANG STEEL H and MAANSHAN IRON H 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.