Correlation Between Eternal Materials and Yung Chi
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Yung Chi 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 Eternal Materials and Yung Chi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Yung Chi Paint, you can compare the effects of market volatilities on Eternal Materials and Yung Chi 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 Eternal Materials with a short position of Yung Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Yung Chi.
Diversification Opportunities for Eternal Materials and Yung Chi
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eternal and Yung is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Yung Chi Paint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yung Chi Paint and Eternal Materials 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 Eternal Materials Co are associated (or correlated) with Yung Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yung Chi Paint has no effect on the direction of Eternal Materials i.e., Eternal Materials and Yung Chi go up and down completely randomly.
Pair Corralation between Eternal Materials and Yung Chi
Assuming the 90 days trading horizon Eternal Materials Co is expected to generate 1.85 times more return on investment than Yung Chi. However, Eternal Materials is 1.85 times more volatile than Yung Chi Paint. It trades about -0.02 of its potential returns per unit of risk. Yung Chi Paint is currently generating about -0.06 per unit of risk. If you would invest 3,130 in Eternal Materials Co on September 1, 2024 and sell it today you would lose (150.00) from holding Eternal Materials Co or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Eternal Materials Co vs. Yung Chi Paint
Performance |
| Timeline |
| Eternal Materials |
| Yung Chi Paint |
Eternal Materials and Yung Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Yung Chi
The main advantage of trading using opposite Eternal Materials and Yung Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Yung Chi 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 Yung Chi will offset losses from the drop in Yung Chi's long position.| Eternal Materials vs. Taiwan Fertilizer Co | Eternal Materials vs. Nan Ya Plastics | Eternal Materials vs. Formosa Chemicals Fibre | Eternal Materials vs. Far Eastern New |
| Yung Chi vs. China Steel Chemical | Yung Chi vs. Taiwan Secom Co | Yung Chi vs. Standard Foods Corp | Yung Chi vs. Eternal Materials Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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