Correlation Between Chun Yuan and Yieh United
Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Yieh United 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 Yieh United 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 Yieh United Steel, you can compare the effects of market volatilities on Chun Yuan and Yieh United 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 Yieh United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Yieh United.
Diversification Opportunities for Chun Yuan and Yieh United
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chun and Yieh is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Yieh United Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yieh United Steel 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 Yieh United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yieh United Steel has no effect on the direction of Chun Yuan i.e., Chun Yuan and Yieh United go up and down completely randomly.
Pair Corralation between Chun Yuan and Yieh United
Assuming the 90 days trading horizon Chun Yuan Steel is expected to generate 0.9 times more return on investment than Yieh United. However, Chun Yuan Steel is 1.11 times less risky than Yieh United. It trades about 0.03 of its potential returns per unit of risk. Yieh United Steel is currently generating about -0.02 per unit of risk. If you would invest 1,570 in Chun Yuan Steel on September 1, 2024 and sell it today you would earn a total of 275.00 from holding Chun Yuan Steel or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chun Yuan Steel vs. Yieh United Steel
Performance |
| Timeline |
| Chun Yuan Steel |
| Yieh United Steel |
Chun Yuan and Yieh United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chun Yuan and Yieh United
The main advantage of trading using opposite Chun Yuan and Yieh United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, Yieh United 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 Yieh United will offset losses from the drop in Yieh United'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 |
| Yieh United vs. Basso Industry Corp | Yieh United vs. Chung Hsin Electric Machinery | Yieh United vs. TYC Brother Industrial | Yieh United vs. TECO Electric Machinery |
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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