Correlation Between Chun Yuan and Iron Force
Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Iron Force 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 Iron Force 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 Iron Force Industrial, you can compare the effects of market volatilities on Chun Yuan and Iron Force 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 Iron Force. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Iron Force.
Diversification Opportunities for Chun Yuan and Iron Force
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chun and Iron is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Iron Force Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Force Industrial 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 Iron Force. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Force Industrial has no effect on the direction of Chun Yuan i.e., Chun Yuan and Iron Force go up and down completely randomly.
Pair Corralation between Chun Yuan and Iron Force
Assuming the 90 days trading horizon Chun Yuan is expected to generate 1.33 times less return on investment than Iron Force. But when comparing it to its historical volatility, Chun Yuan Steel is 1.44 times less risky than Iron Force. It trades about 0.03 of its potential returns per unit of risk. Iron Force Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,620 in Iron Force Industrial on August 29, 2024 and sell it today you would earn a total of 880.00 from holding Iron Force Industrial or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chun Yuan Steel vs. Iron Force Industrial
Performance |
| Timeline |
| Chun Yuan Steel |
| Iron Force Industrial |
Chun Yuan and Iron Force Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chun Yuan and Iron Force
The main advantage of trading using opposite Chun Yuan and Iron Force positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, Iron Force 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 Iron Force will offset losses from the drop in Iron Force's long position.| Chun Yuan vs. China Man Made Fiber | Chun Yuan vs. USI Corp | Chun Yuan vs. China Petrochemical Development | Chun Yuan vs. Yulon Motor Co |
| Iron Force vs. Hota Industrial Mfg | Iron Force vs. BizLink Holding | Iron Force vs. Cub Elecparts | Iron Force vs. Hu Lane Associate |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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