Correlation Between Yeong Guan and China Metal
Can any of the company-specific risk be diversified away by investing in both Yeong Guan and China Metal 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 Yeong Guan and China Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yeong Guan Energy and China Metal Products, you can compare the effects of market volatilities on Yeong Guan and China Metal 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 Yeong Guan with a short position of China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeong Guan and China Metal.
Diversification Opportunities for Yeong Guan and China Metal
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yeong and China is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Yeong Guan Energy and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products and Yeong Guan 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 Yeong Guan Energy are associated (or correlated) with China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of Yeong Guan i.e., Yeong Guan and China Metal go up and down completely randomly.
Pair Corralation between Yeong Guan and China Metal
Assuming the 90 days trading horizon Yeong Guan Energy is expected to under-perform the China Metal. In addition to that, Yeong Guan is 1.02 times more volatile than China Metal Products. It trades about -0.08 of its total potential returns per unit of risk. China Metal Products is currently generating about 0.0 per unit of volatility. If you would invest 3,615 in China Metal Products on August 27, 2024 and sell it today you would lose (225.00) from holding China Metal Products or give up 6.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yeong Guan Energy vs. China Metal Products
Performance |
| Timeline |
| Yeong Guan Energy |
| China Metal Products |
Yeong Guan and China Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yeong Guan and China Metal
The main advantage of trading using opposite Yeong Guan and China Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeong Guan position performs unexpectedly, China Metal 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 China Metal will offset losses from the drop in China Metal's long position.| Yeong Guan vs. TECO Electric Machinery | Yeong Guan vs. Swancor Holding Co | Yeong Guan vs. Airtac International Group | Yeong Guan vs. Grape King Bio |
| 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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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