Correlation Between China Steel and Advanced Analog
Can any of the company-specific risk be diversified away by investing in both China Steel and Advanced Analog 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 Advanced Analog 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 Advanced Analog Technology, you can compare the effects of market volatilities on China Steel and Advanced Analog 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 Advanced Analog. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Advanced Analog.
Diversification Opportunities for China Steel and Advanced Analog
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Advanced is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Advanced Analog Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Analog Tech 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 Advanced Analog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Analog Tech has no effect on the direction of China Steel i.e., China Steel and Advanced Analog go up and down completely randomly.
Pair Corralation between China Steel and Advanced Analog
Assuming the 90 days trading horizon China Steel Corp is expected to generate 25.72 times more return on investment than Advanced Analog. However, China Steel is 25.72 times more volatile than Advanced Analog Technology. It trades about 0.06 of its potential returns per unit of risk. Advanced Analog Technology is currently generating about 0.01 per unit of risk. If you would invest 4,370 in China Steel Corp on September 14, 2024 and sell it today you would lose (185.00) from holding China Steel Corp or give up 4.23% 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. Advanced Analog Technology
Performance |
| Timeline |
| China Steel Corp |
| Advanced Analog Tech |
China Steel and Advanced Analog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Advanced Analog
The main advantage of trading using opposite China Steel and Advanced Analog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Advanced Analog 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 Advanced Analog will offset losses from the drop in Advanced Analog's long position.| China Steel vs. Data International Co | China Steel vs. Eagle Cold Storage | China Steel vs. Mospec Semiconductor Corp | China Steel vs. Holtek Semiconductor |
| Advanced Analog vs. Taiwan Speciality Chemicals | Advanced Analog vs. Chien Kuo Construction | Advanced Analog vs. Great China Metal | Advanced Analog vs. Mechema Chemicals Int |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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