Correlation Between China Steel and Chia Ta
Can any of the company-specific risk be diversified away by investing in both China Steel and Chia Ta 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 Chia Ta 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 Chia Ta World, you can compare the effects of market volatilities on China Steel and Chia Ta 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 Chia Ta. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Chia Ta.
Diversification Opportunities for China Steel and Chia Ta
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Chia is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Chia Ta World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Ta World 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 Chia Ta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Ta World has no effect on the direction of China Steel i.e., China Steel and Chia Ta go up and down completely randomly.
Pair Corralation between China Steel and Chia Ta
Assuming the 90 days trading horizon China Steel Corp is expected to generate 0.13 times more return on investment than Chia Ta. However, China Steel Corp is 7.88 times less risky than Chia Ta. It trades about -0.12 of its potential returns per unit of risk. Chia Ta World is currently generating about -0.09 per unit of risk. If you would invest 4,230 in China Steel Corp on August 28, 2024 and sell it today you would lose (40.00) from holding China Steel Corp or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Corp vs. Chia Ta World
Performance |
| Timeline |
| China Steel Corp |
| Chia Ta World |
China Steel and Chia Ta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Chia Ta
The main advantage of trading using opposite China Steel and Chia Ta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Chia Ta 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 Chia Ta will offset losses from the drop in Chia Ta's long position.| China Steel vs. Apex Biotechnology Corp | China Steel vs. Universal Vision Biotechnology | China Steel vs. Univacco Technology | China Steel vs. MedFirst Healthcare Services |
| Chia Ta vs. Chun Yuan Steel | Chia Ta vs. Chun Yu Works | Chia Ta vs. China Steel Structure | Chia Ta vs. Chih Lien Industrial |
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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