Correlation Between China Steel and Vate Technology
Can any of the company-specific risk be diversified away by investing in both China Steel and Vate Technology 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 Vate Technology 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 Vate Technology Co, you can compare the effects of market volatilities on China Steel and Vate Technology 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 Vate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Vate Technology.
Diversification Opportunities for China Steel and Vate Technology
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Vate is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Vate Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vate Technology 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 Vate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vate Technology has no effect on the direction of China Steel i.e., China Steel and Vate Technology go up and down completely randomly.
Pair Corralation between China Steel and Vate Technology
Assuming the 90 days trading horizon China Steel Corp is expected to generate 0.9 times more return on investment than Vate Technology. However, China Steel Corp is 1.12 times less risky than Vate Technology. It trades about -0.13 of its potential returns per unit of risk. Vate Technology Co is currently generating about -0.32 per unit of risk. If you would invest 2,250 in China Steel Corp on August 31, 2024 and sell it today you would lose (75.00) from holding China Steel Corp or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Corp vs. Vate Technology Co
Performance |
| Timeline |
| China Steel Corp |
| Vate Technology |
China Steel and Vate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Vate Technology
The main advantage of trading using opposite China Steel and Vate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Vate Technology 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 Vate Technology will offset losses from the drop in Vate Technology'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 |
| Vate Technology vs. Arbor Technology | Vate Technology vs. Microelectronics Technology | Vate Technology vs. WinMate Communication INC | Vate Technology vs. United Radiant Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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