Correlation Between China Steel and Lifestyle Global
Can any of the company-specific risk be diversified away by investing in both China Steel and Lifestyle Global 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 Lifestyle Global 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 Lifestyle Global Enterprise, you can compare the effects of market volatilities on China Steel and Lifestyle Global 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 Lifestyle Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Lifestyle Global.
Diversification Opportunities for China Steel and Lifestyle Global
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Lifestyle is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Lifestyle Global Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Global Ent 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 Lifestyle Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Global Ent has no effect on the direction of China Steel i.e., China Steel and Lifestyle Global go up and down completely randomly.
Pair Corralation between China Steel and Lifestyle Global
Assuming the 90 days trading horizon China Steel Corp is expected to under-perform the Lifestyle Global. In addition to that, China Steel is 1.16 times more volatile than Lifestyle Global Enterprise. It trades about -0.6 of its total potential returns per unit of risk. Lifestyle Global Enterprise is currently generating about -0.43 per unit of volatility. If you would invest 2,810 in Lifestyle Global Enterprise on October 13, 2024 and sell it today you would lose (200.00) from holding Lifestyle Global Enterprise or give up 7.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Steel Corp vs. Lifestyle Global Enterprise
Performance |
| Timeline |
| China Steel Corp |
| Lifestyle Global Ent |
China Steel and Lifestyle Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Lifestyle Global
The main advantage of trading using opposite China Steel and Lifestyle Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Lifestyle Global 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 Lifestyle Global will offset losses from the drop in Lifestyle Global'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 |
| Lifestyle Global vs. United Radiant Technology | Lifestyle Global vs. Yuan High Tech Development | Lifestyle Global vs. Central Reinsurance Corp | Lifestyle Global vs. Daxin Materials 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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