Correlation Between China Steel and Concraft Holding
Can any of the company-specific risk be diversified away by investing in both China Steel and Concraft Holding 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 Concraft Holding 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 Concraft Holding Co, you can compare the effects of market volatilities on China Steel and Concraft Holding 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 Concraft Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Concraft Holding.
Diversification Opportunities for China Steel and Concraft Holding
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Concraft is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Concraft Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concraft Holding 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 Concraft Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concraft Holding has no effect on the direction of China Steel i.e., China Steel and Concraft Holding go up and down completely randomly.
Pair Corralation between China Steel and Concraft Holding
Assuming the 90 days trading horizon China Steel Corp is expected to generate 0.62 times more return on investment than Concraft Holding. However, China Steel Corp is 1.61 times less risky than Concraft Holding. It trades about -0.05 of its potential returns per unit of risk. Concraft Holding Co is currently generating about -0.11 per unit of risk. If you would invest 2,380 in China Steel Corp on August 30, 2024 and sell it today you would lose (205.00) from holding China Steel Corp or give up 8.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Corp vs. Concraft Holding Co
Performance |
| Timeline |
| China Steel Corp |
| Concraft Holding |
China Steel and Concraft Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Concraft Holding
The main advantage of trading using opposite China Steel and Concraft Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Concraft Holding 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 Concraft Holding will offset losses from the drop in Concraft Holding'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 |
| Concraft Holding vs. Merry Electronics Co | Concraft Holding vs. Flexium Interconnect | Concraft Holding vs. General Interface Solution | Concraft Holding vs. Genius Electronic Optical |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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