Correlation Between China Steel and Chain Chon
Can any of the company-specific risk be diversified away by investing in both China Steel and Chain Chon 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 Chain Chon 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 Chain Chon Industrial, you can compare the effects of market volatilities on China Steel and Chain Chon 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 Chain Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Chain Chon.
Diversification Opportunities for China Steel and Chain Chon
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Chain is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Chain Chon Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chain Chon Industrial 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 Chain Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chain Chon Industrial has no effect on the direction of China Steel i.e., China Steel and Chain Chon go up and down completely randomly.
Pair Corralation between China Steel and Chain Chon
Assuming the 90 days trading horizon China Steel Corp is expected to generate 0.44 times more return on investment than Chain Chon. However, China Steel Corp is 2.28 times less risky than Chain Chon. It trades about -0.21 of its potential returns per unit of risk. Chain Chon Industrial is currently generating about -0.27 per unit of risk. If you would invest 2,250 in China Steel Corp on September 1, 2024 and sell it today you would lose (130.00) from holding China Steel Corp or give up 5.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Steel Corp vs. Chain Chon Industrial
Performance |
| Timeline |
| China Steel Corp |
| Chain Chon Industrial |
China Steel and Chain Chon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Chain Chon
The main advantage of trading using opposite China Steel and Chain Chon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Chain Chon 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 Chain Chon will offset losses from the drop in Chain Chon'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 |
| Chain Chon vs. Iron Force Industrial | Chain Chon vs. Skardin Industrial | Chain Chon vs. Tehmag Foods | Chain Chon vs. Ever Clear Environmental Eng |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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