Correlation Between China Steel and Tex Year
Can any of the company-specific risk be diversified away by investing in both China Steel and Tex Year 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 Tex Year 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 Tex Year Industries, you can compare the effects of market volatilities on China Steel and Tex Year 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 Tex Year. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Tex Year.
Diversification Opportunities for China Steel and Tex Year
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Tex is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Chemical and Tex Year Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Year Industries 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 Tex Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Year Industries has no effect on the direction of China Steel i.e., China Steel and Tex Year go up and down completely randomly.
Pair Corralation between China Steel and Tex Year
Assuming the 90 days trading horizon China Steel Chemical is expected to generate 0.47 times more return on investment than Tex Year. However, China Steel Chemical is 2.13 times less risky than Tex Year. It trades about -0.04 of its potential returns per unit of risk. Tex Year Industries is currently generating about -0.06 per unit of risk. If you would invest 10,000 in China Steel Chemical on August 31, 2024 and sell it today you would lose (300.00) from holding China Steel Chemical or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Chemical vs. Tex Year Industries
Performance |
| Timeline |
| China Steel Chemical |
| Tex Year Industries |
China Steel and Tex Year Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Tex Year
The main advantage of trading using opposite China Steel and Tex Year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Tex Year 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 Tex Year will offset losses from the drop in Tex Year'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 |
| Tex Year vs. Jinan Acetate Chemical | Tex Year vs. San Fu Chemical | Tex Year vs. Concraft Holding Co | Tex Year vs. Halfords Group PLC |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |