Correlation Between China Metal and S Tech
Can any of the company-specific risk be diversified away by investing in both China Metal and S Tech 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 China Metal and S Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Metal Products and S Tech Corp, you can compare the effects of market volatilities on China Metal and S Tech 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 China Metal with a short position of S Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and S Tech.
Diversification Opportunities for China Metal and S Tech
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and 1584 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and S Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S Tech Corp and China Metal 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 China Metal Products are associated (or correlated) with S Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S Tech Corp has no effect on the direction of China Metal i.e., China Metal and S Tech go up and down completely randomly.
Pair Corralation between China Metal and S Tech
Assuming the 90 days trading horizon China Metal Products is expected to generate 0.56 times more return on investment than S Tech. However, China Metal Products is 1.78 times less risky than S Tech. It trades about -0.16 of its potential returns per unit of risk. S Tech Corp is currently generating about -0.24 per unit of risk. If you would invest 3,100 in China Metal Products on November 1, 2024 and sell it today you would lose (85.00) from holding China Metal Products or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. S Tech Corp
Performance |
| Timeline |
| China Metal Products |
| S Tech Corp |
China Metal and S Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and S Tech
The main advantage of trading using opposite China Metal and S Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, S Tech 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 S Tech will offset losses from the drop in S Tech's long position.| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
| S Tech vs. Formosa International Hotels | S Tech vs. Tait Marketing Distribution | S Tech vs. Formosa Chemicals Fibre | S Tech vs. Tehmag Foods |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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