Correlation Between China Steel and Skardin Industrial
Can any of the company-specific risk be diversified away by investing in both China Steel and Skardin Industrial 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 Skardin Industrial 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 Skardin Industrial, you can compare the effects of market volatilities on China Steel and Skardin Industrial 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 Skardin Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Skardin Industrial.
Diversification Opportunities for China Steel and Skardin Industrial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Skardin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Skardin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skardin Industrial 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 Skardin Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skardin Industrial has no effect on the direction of China Steel i.e., China Steel and Skardin Industrial go up and down completely randomly.
Pair Corralation between China Steel and Skardin Industrial
Assuming the 90 days trading horizon China Steel Corp is expected to under-perform the Skardin Industrial. But the stock apears to be less risky and, when comparing its historical volatility, China Steel Corp is 14.33 times less risky than Skardin Industrial. The stock trades about -0.24 of its potential returns per unit of risk. The Skardin Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,880 in Skardin Industrial on November 30, 2024 and sell it today you would earn a total of 120.00 from holding Skardin Industrial or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Corp vs. Skardin Industrial
Performance |
| Timeline |
| China Steel Corp |
| Skardin Industrial |
China Steel and Skardin Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Skardin Industrial
The main advantage of trading using opposite China Steel and Skardin Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Skardin Industrial 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 Skardin Industrial will offset losses from the drop in Skardin Industrial's long position.| China Steel vs. Castles Technology Co | China Steel vs. Univacco Technology | China Steel vs. Grand Ocean Retail | China Steel vs. STL Technology Co |
| Skardin Industrial vs. Xxentria Technology Materials | Skardin Industrial vs. Tradetool Auto Co | Skardin Industrial vs. Hi Lai Foods Co | Skardin Industrial vs. Johnson Health Tech |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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