Correlation Between Maanshan Iron and Alabama Aircraft

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

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

Diversification Opportunities for Maanshan Iron and Alabama Aircraft

0.0

Correlation Coefficient

Maanshan Iron  Alabama Aircraft

Pay attention - limited upside

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

Pair Corralation between Maanshan Iron and Alabama Aircraft

If you would invest  18.00  in Maanshan Iron Steel on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Maanshan Iron Steel or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Maanshan Iron Steel  vs.  Alabama Aircraft Industries

Maanshan Iron Steel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maanshan Iron Steel are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Maanshan Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Alabama Aircraft Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alabama Aircraft Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Alabama Aircraft is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Maanshan Iron and Alabama Aircraft

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

The idea behind Maanshan Iron Steel and Alabama Aircraft Industries 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.