Correlation Between China Steel and Run Long
Can any of the company-specific risk be diversified away by investing in both China Steel and Run Long 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 Run Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Steel Corp and Run Long Construction, you can compare the effects of market volatilities on China Steel and Run Long 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 Run Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Run Long.
Diversification Opportunities for China Steel and Run Long
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Run is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Run Long Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Run Long Construction 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 Corp are associated (or correlated) with Run Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Run Long Construction has no effect on the direction of China Steel i.e., China Steel and Run Long go up and down completely randomly.
Pair Corralation between China Steel and Run Long
Assuming the 90 days trading horizon China Steel Corp is expected to generate 2.15 times more return on investment than Run Long. However, China Steel is 2.15 times more volatile than Run Long Construction. It trades about 0.38 of its potential returns per unit of risk. Run Long Construction is currently generating about 0.19 per unit of risk. If you would invest 2,000 in China Steel Corp on November 28, 2024 and sell it today you would earn a total of 390.00 from holding China Steel Corp or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Corp vs. Run Long Construction
Performance |
| Timeline |
| China Steel Corp |
| Run Long Construction |
China Steel and Run Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Run Long
The main advantage of trading using opposite China Steel and Run Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Run Long 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 Run Long will offset losses from the drop in Run Long's long position.| China Steel vs. Formosa Plastics Corp | China Steel vs. Chunghwa Telecom Co | China Steel vs. Nan Ya Plastics | China Steel vs. Cathay Financial Holding |
| Run Long vs. Chang Type Industrial | Run Long vs. Anderson Industrial Corp | Run Long vs. Klingon Aerospace | Run Long vs. Basso Industry Corp |
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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