Correlation Between China Steel and EnTie Commercial
Can any of the company-specific risk be diversified away by investing in both China Steel and EnTie Commercial 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 EnTie Commercial 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 EnTie Commercial Bank, you can compare the effects of market volatilities on China Steel and EnTie Commercial 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 EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and EnTie Commercial.
Diversification Opportunities for China Steel and EnTie Commercial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and EnTie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Chemical and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank 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 EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of China Steel i.e., China Steel and EnTie Commercial go up and down completely randomly.
Pair Corralation between China Steel and EnTie Commercial
Assuming the 90 days trading horizon China Steel Chemical is expected to generate 0.58 times more return on investment than EnTie Commercial. However, China Steel Chemical is 1.73 times less risky than EnTie Commercial. It trades about -0.07 of its potential returns per unit of risk. EnTie Commercial Bank is currently generating about -0.06 per unit of risk. If you would invest 10,150 in China Steel Chemical on August 29, 2024 and sell it today you would lose (260.00) from holding China Steel Chemical or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Chemical vs. EnTie Commercial Bank
Performance |
| Timeline |
| China Steel Chemical |
| EnTie Commercial Bank |
China Steel and EnTie Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and EnTie Commercial
The main advantage of trading using opposite China Steel and EnTie Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, EnTie Commercial 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 EnTie Commercial will offset losses from the drop in EnTie Commercial's long position.| China Steel vs. China Man Made Fiber | China Steel vs. USI Corp | China Steel vs. China Petrochemical Development | China Steel vs. Yulon Motor Co |
| EnTie Commercial vs. Taiwan Secom Co | EnTie Commercial vs. TTET Union Corp | EnTie Commercial vs. China Steel Chemical | EnTie Commercial vs. Taiwan Shin Kong |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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