Correlation Between China Steel and WinMate Communication
Can any of the company-specific risk be diversified away by investing in both China Steel and WinMate Communication 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 WinMate Communication 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 WinMate Communication INC, you can compare the effects of market volatilities on China Steel and WinMate Communication 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 WinMate Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and WinMate Communication.
Diversification Opportunities for China Steel and WinMate Communication
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and WinMate is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and WinMate Communication INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WinMate Communication INC 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 WinMate Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WinMate Communication INC has no effect on the direction of China Steel i.e., China Steel and WinMate Communication go up and down completely randomly.
Pair Corralation between China Steel and WinMate Communication
Assuming the 90 days trading horizon China Steel Corp is expected to generate 27.77 times more return on investment than WinMate Communication. However, China Steel is 27.77 times more volatile than WinMate Communication INC. It trades about 0.05 of its potential returns per unit of risk. WinMate Communication INC is currently generating about 0.05 per unit of risk. If you would invest 4,420 in China Steel Corp on September 2, 2024 and sell it today you would lose (245.00) from holding China Steel Corp or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
China Steel Corp vs. WinMate Communication INC
Performance |
| Timeline |
| China Steel Corp |
| WinMate Communication INC |
China Steel and WinMate Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and WinMate Communication
The main advantage of trading using opposite China Steel and WinMate Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, WinMate Communication 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 WinMate Communication will offset losses from the drop in WinMate Communication's long position.| China Steel vs. Synmosa Biopharma | China Steel vs. Taiwan Glass Ind | China Steel vs. Tong Tai Machine Tool | China Steel vs. Oriental Union Chemical |
| WinMate Communication vs. Hon Hai Precision | WinMate Communication vs. Delta Electronics | WinMate Communication vs. LARGAN Precision Co | WinMate Communication vs. Yageo 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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