Correlation Between Yung Chi and China Steel
Can any of the company-specific risk be diversified away by investing in both Yung Chi and China Steel 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 Yung Chi and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yung Chi Paint and China Steel Chemical, you can compare the effects of market volatilities on Yung Chi and China Steel 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 Yung Chi with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yung Chi and China Steel.
Diversification Opportunities for Yung Chi and China Steel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yung and China is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Yung Chi Paint and China Steel Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Chemical and Yung Chi 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 Yung Chi Paint are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Chemical has no effect on the direction of Yung Chi i.e., Yung Chi and China Steel go up and down completely randomly.
Pair Corralation between Yung Chi and China Steel
Assuming the 90 days trading horizon Yung Chi Paint is expected to under-perform the China Steel. But the stock apears to be less risky and, when comparing its historical volatility, Yung Chi Paint is 1.25 times less risky than China Steel. The stock trades about -0.08 of its potential returns per unit of risk. The China Steel Chemical is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 9,700 in China Steel Chemical on August 30, 2024 and sell it today you would earn a total of 0.00 from holding China Steel Chemical or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yung Chi Paint vs. China Steel Chemical
Performance |
| Timeline |
| Yung Chi Paint |
| China Steel Chemical |
Yung Chi and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yung Chi and China Steel
The main advantage of trading using opposite Yung Chi and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yung Chi position performs unexpectedly, China Steel 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 China Steel will offset losses from the drop in China Steel's long position.| Yung Chi vs. China Steel Chemical | Yung Chi vs. Taiwan Secom Co | Yung Chi vs. Standard Foods Corp | Yung Chi vs. Eternal Materials Co |
| China Steel vs. Formosa Chemicals Fibre | China Steel vs. Formosa Plastics Corp | China Steel vs. Cheng Shin Rubber | China Steel vs. President Chain Store |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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