Correlation Between China Steel and Nantex Industry
Can any of the company-specific risk be diversified away by investing in both China Steel and Nantex Industry 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 Nantex Industry 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 Nantex Industry Co, you can compare the effects of market volatilities on China Steel and Nantex Industry 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 Nantex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Nantex Industry.
Diversification Opportunities for China Steel and Nantex Industry
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Nantex is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry 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 Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of China Steel i.e., China Steel and Nantex Industry go up and down completely randomly.
Pair Corralation between China Steel and Nantex Industry
Assuming the 90 days trading horizon China Steel Corp is expected to generate 27.9 times more return on investment than Nantex Industry. However, China Steel is 27.9 times more volatile than Nantex Industry Co. It trades about 0.04 of its potential returns per unit of risk. Nantex Industry Co is currently generating about 0.0 per unit of risk. If you would invest 4,488 in China Steel Corp on August 29, 2024 and sell it today you would lose (303.00) from holding China Steel Corp or give up 6.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Corp vs. Nantex Industry Co
Performance |
| Timeline |
| China Steel Corp |
| Nantex Industry |
China Steel and Nantex Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Nantex Industry
The main advantage of trading using opposite China Steel and Nantex Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Nantex Industry 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 Nantex Industry will offset losses from the drop in Nantex Industry's long position.| China Steel vs. China Steel Corp | China Steel vs. Chung Hung Steel | China Steel vs. Tung Ho Steel | China Steel vs. Feng Hsin Steel |
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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 Stocks Directory module to find actively traded stocks across global markets.
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