Correlation Between Chun Yuan and China Steel
Can any of the company-specific risk be diversified away by investing in both Chun Yuan and China Steel 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 Chun Yuan and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chun Yuan Steel and China Steel Corp, you can compare the effects of market volatilities on Chun Yuan and China Steel 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 Chun Yuan with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and China Steel.
Diversification Opportunities for Chun Yuan and China Steel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chun and China is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and China Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Corp and Chun Yuan 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 Chun Yuan Steel are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Corp has no effect on the direction of Chun Yuan i.e., Chun Yuan and China Steel go up and down completely randomly.
Pair Corralation between Chun Yuan and China Steel
Assuming the 90 days trading horizon Chun Yuan is expected to generate 44.68 times less return on investment than China Steel. But when comparing it to its historical volatility, Chun Yuan Steel is 31.92 times less risky than China Steel. It trades about 0.03 of its potential returns per unit of risk. China Steel Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,497 in China Steel Corp on September 14, 2024 and sell it today you would lose (312.00) from holding China Steel Corp or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Chun Yuan Steel vs. China Steel Corp
Performance |
| Timeline |
| Chun Yuan Steel |
| China Steel Corp |
Chun Yuan and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chun Yuan and China Steel
The main advantage of trading using opposite Chun Yuan and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, China Steel 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 China Steel will offset losses from the drop in China Steel's long position.| Chun Yuan vs. Tainan Spinning Co | Chun Yuan vs. Lealea Enterprise Co | Chun Yuan vs. China Petrochemical Development | Chun Yuan vs. Ruentex Development Co |
| China Steel vs. Data International Co | China Steel vs. Eagle Cold Storage | China Steel vs. Mospec Semiconductor Corp | China Steel vs. Holtek Semiconductor |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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