Correlation Between China Steel and TTET Union
Can any of the company-specific risk be diversified away by investing in both China Steel and TTET Union 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 Steel and TTET Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Steel Chemical and TTET Union Corp, you can compare the effects of market volatilities on China Steel and TTET Union 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 Steel with a short position of TTET Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and TTET Union.
Diversification Opportunities for China Steel and TTET Union
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and TTET is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Chemical and TTET Union Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTET Union Corp and China Steel 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 Steel Chemical are associated (or correlated) with TTET Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTET Union Corp has no effect on the direction of China Steel i.e., China Steel and TTET Union go up and down completely randomly.
Pair Corralation between China Steel and TTET Union
Assuming the 90 days trading horizon China Steel Chemical is expected to generate 1.09 times more return on investment than TTET Union. However, China Steel is 1.09 times more volatile than TTET Union Corp. It trades about -0.08 of its potential returns per unit of risk. TTET Union Corp is currently generating about -0.4 per unit of risk. If you would invest 9,750 in China Steel Chemical on August 24, 2024 and sell it today you would lose (140.00) from holding China Steel Chemical or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Steel Chemical vs. TTET Union Corp
Performance |
| Timeline |
| China Steel Chemical |
| TTET Union Corp |
China Steel and TTET Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and TTET Union
The main advantage of trading using opposite China Steel and TTET Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, TTET Union 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 TTET Union will offset losses from the drop in TTET Union's long position.| China Steel vs. Formosa Chemicals Fibre | China Steel vs. Formosa Plastics Corp | China Steel vs. Cheng Shin Rubber | China Steel vs. President Chain Store |
| TTET Union vs. Charoen Pokphand Enterprise | TTET Union vs. Standard Foods Corp | TTET Union vs. Uni President Enterprises Corp | TTET Union vs. Great Wall Enterprise |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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