Correlation Between China Steel and Grape King
Can any of the company-specific risk be diversified away by investing in both China Steel and Grape King 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 Grape King 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 Grape King Bio, you can compare the effects of market volatilities on China Steel and Grape King 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 Grape King. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Grape King.
Diversification Opportunities for China Steel and Grape King
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Grape is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Chemical and Grape King Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grape King Bio 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 Grape King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grape King Bio has no effect on the direction of China Steel i.e., China Steel and Grape King go up and down completely randomly.
Pair Corralation between China Steel and Grape King
Assuming the 90 days trading horizon China Steel Chemical is expected to generate 0.95 times more return on investment than Grape King. However, China Steel Chemical is 1.05 times less risky than Grape King. It trades about 0.03 of its potential returns per unit of risk. Grape King Bio is currently generating about -0.13 per unit of risk. If you would invest 9,180 in China Steel Chemical on October 25, 2024 and sell it today you would earn a total of 50.00 from holding China Steel Chemical or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Chemical vs. Grape King Bio
Performance |
| Timeline |
| China Steel Chemical |
| Grape King Bio |
China Steel and Grape King Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Grape King
The main advantage of trading using opposite China Steel and Grape King positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Grape King 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 Grape King will offset losses from the drop in Grape King'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 |
| Grape King vs. Standard Foods Corp | Grape King vs. Eclat Textile Co | Grape King vs. Feng Tay Enterprises | Grape King vs. China Steel Chemical |
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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