Correlation Between China Metal and Yeong Guan
Can any of the company-specific risk be diversified away by investing in both China Metal and Yeong Guan 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 Yeong Guan 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 Yeong Guan Energy, you can compare the effects of market volatilities on China Metal and Yeong Guan 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 Yeong Guan. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Yeong Guan.
Diversification Opportunities for China Metal and Yeong Guan
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Yeong is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Yeong Guan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeong Guan Energy 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 Yeong Guan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeong Guan Energy has no effect on the direction of China Metal i.e., China Metal and Yeong Guan go up and down completely randomly.
Pair Corralation between China Metal and Yeong Guan
Assuming the 90 days trading horizon China Metal Products is expected to generate 0.89 times more return on investment than Yeong Guan. However, China Metal Products is 1.13 times less risky than Yeong Guan. It trades about 0.02 of its potential returns per unit of risk. Yeong Guan Energy is currently generating about -0.05 per unit of risk. If you would invest 3,030 in China Metal Products on August 27, 2024 and sell it today you would earn a total of 360.00 from holding China Metal Products or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Yeong Guan Energy
Performance |
| Timeline |
| China Metal Products |
| Yeong Guan Energy |
China Metal and Yeong Guan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Yeong Guan
The main advantage of trading using opposite China Metal and Yeong Guan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Yeong Guan 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 Yeong Guan will offset losses from the drop in Yeong Guan'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 |
| Yeong Guan vs. TECO Electric Machinery | Yeong Guan vs. Swancor Holding Co | Yeong Guan vs. Airtac International Group | Yeong Guan vs. Grape King Bio |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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