Correlation Between China Steel and Sinkang Industries
Can any of the company-specific risk be diversified away by investing in both China Steel and Sinkang Industries 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 Sinkang Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Steel Structure and Sinkang Industries Co, you can compare the effects of market volatilities on China Steel and Sinkang Industries 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 Sinkang Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Sinkang Industries.
Diversification Opportunities for China Steel and Sinkang Industries
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Sinkang is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Structure and Sinkang Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinkang Industries 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 Structure are associated (or correlated) with Sinkang Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinkang Industries has no effect on the direction of China Steel i.e., China Steel and Sinkang Industries go up and down completely randomly.
Pair Corralation between China Steel and Sinkang Industries
Assuming the 90 days trading horizon China Steel Structure is expected to generate 0.65 times more return on investment than Sinkang Industries. However, China Steel Structure is 1.54 times less risky than Sinkang Industries. It trades about -0.01 of its potential returns per unit of risk. Sinkang Industries Co is currently generating about -0.02 per unit of risk. If you would invest 5,760 in China Steel Structure on August 31, 2024 and sell it today you would lose (460.00) from holding China Steel Structure or give up 7.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Steel Structure vs. Sinkang Industries Co
Performance |
| Timeline |
| China Steel Structure |
| Sinkang Industries |
China Steel and Sinkang Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Steel and Sinkang Industries
The main advantage of trading using opposite China Steel and Sinkang Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Sinkang Industries 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 Sinkang Industries will offset losses from the drop in Sinkang Industries' long position.| China Steel vs. Chung Hung Steel | China Steel vs. China Steel Corp | China Steel vs. Chun Yuan Steel | China Steel vs. Hsin Kuang Steel |
| Sinkang Industries vs. Basso Industry Corp | Sinkang Industries vs. Chung Hsin Electric Machinery | Sinkang Industries vs. TYC Brother Industrial | Sinkang Industries 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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