Correlation Between Chun Yuan and Evergreen Steel
Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Evergreen 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 Evergreen 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 Evergreen Steel Corp, you can compare the effects of market volatilities on Chun Yuan and Evergreen 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 Evergreen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Evergreen Steel.
Diversification Opportunities for Chun Yuan and Evergreen Steel
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chun and Evergreen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Evergreen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen 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 Evergreen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Steel Corp has no effect on the direction of Chun Yuan i.e., Chun Yuan and Evergreen Steel go up and down completely randomly.
Pair Corralation between Chun Yuan and Evergreen Steel
Assuming the 90 days trading horizon Chun Yuan Steel is expected to generate 0.93 times more return on investment than Evergreen Steel. However, Chun Yuan Steel is 1.08 times less risky than Evergreen Steel. It trades about 0.03 of its potential returns per unit of risk. Evergreen Steel Corp is currently generating about -0.21 per unit of risk. If you would invest 1,810 in Chun Yuan Steel on September 2, 2024 and sell it today you would earn a total of 35.00 from holding Chun Yuan Steel or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chun Yuan Steel vs. Evergreen Steel Corp
Performance |
| Timeline |
| Chun Yuan Steel |
| Evergreen Steel Corp |
Chun Yuan and Evergreen Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chun Yuan and Evergreen Steel
The main advantage of trading using opposite Chun Yuan and Evergreen Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, Evergreen 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 Evergreen Steel will offset losses from the drop in Evergreen Steel's long position.| Chun Yuan vs. Basso Industry Corp | Chun Yuan vs. Chung Hsin Electric Machinery | Chun Yuan vs. TYC Brother Industrial | Chun Yuan vs. TECO Electric Machinery |
| Evergreen Steel vs. Yang Ming Marine | Evergreen Steel vs. Wan Hai Lines | Evergreen Steel vs. Hsin Kuang Steel | Evergreen Steel vs. Evergreen Marine 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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