Correlation Between Eternal Materials and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Chernan 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 Eternal Materials and Chernan Metal 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 Chernan Metal Industrial, you can compare the effects of market volatilities on Eternal Materials and Chernan 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 Eternal Materials with a short position of Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Chernan Metal.
Diversification Opportunities for Eternal Materials and Chernan Metal
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eternal and Chernan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Eternal Materials i.e., Eternal Materials and Chernan Metal go up and down completely randomly.
Pair Corralation between Eternal Materials and Chernan Metal
Assuming the 90 days trading horizon Eternal Materials Co is expected to generate 0.74 times more return on investment than Chernan Metal. However, Eternal Materials Co is 1.35 times less risky than Chernan Metal. It trades about -0.04 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about -0.08 per unit of risk. If you would invest 3,020 in Eternal Materials Co on September 12, 2024 and sell it today you would lose (125.00) from holding Eternal Materials Co or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternal Materials Co vs. Chernan Metal Industrial
Performance |
| Timeline |
| Eternal Materials |
| Chernan Metal Industrial |
Eternal Materials and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Chernan Metal
The main advantage of trading using opposite Eternal Materials and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Chernan 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.| Eternal Materials vs. Tainan Spinning Co | Eternal Materials vs. Lealea Enterprise Co | Eternal Materials vs. China Petrochemical Development | Eternal Materials vs. Ruentex Development Co |
| Chernan Metal vs. Catcher Technology Co | Chernan Metal vs. Solar Applied Materials | Chernan Metal vs. Evergreen Steel Corp | Chernan Metal vs. Shin Zu Shing |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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