Correlation Between Mayer Steel and Chung Lien
Can any of the company-specific risk be diversified away by investing in both Mayer Steel and Chung Lien 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 Mayer Steel and Chung Lien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayer Steel Pipe and Chung Lien Transportation, you can compare the effects of market volatilities on Mayer Steel and Chung Lien 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 Mayer Steel with a short position of Chung Lien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayer Steel and Chung Lien.
Diversification Opportunities for Mayer Steel and Chung Lien
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mayer and Chung is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mayer Steel Pipe and Chung Lien Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Lien Transportation and Mayer 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 Mayer Steel Pipe are associated (or correlated) with Chung Lien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Lien Transportation has no effect on the direction of Mayer Steel i.e., Mayer Steel and Chung Lien go up and down completely randomly.
Pair Corralation between Mayer Steel and Chung Lien
Assuming the 90 days trading horizon Mayer Steel Pipe is expected to generate 2.05 times more return on investment than Chung Lien. However, Mayer Steel is 2.05 times more volatile than Chung Lien Transportation. It trades about 0.04 of its potential returns per unit of risk. Chung Lien Transportation is currently generating about -0.04 per unit of risk. If you would invest 2,400 in Mayer Steel Pipe on December 1, 2024 and sell it today you would earn a total of 700.00 from holding Mayer Steel Pipe or generate 29.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mayer Steel Pipe vs. Chung Lien Transportation
Performance |
| Timeline |
| Mayer Steel Pipe |
| Chung Lien Transportation |
Mayer Steel and Chung Lien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mayer Steel and Chung Lien
The main advantage of trading using opposite Mayer Steel and Chung Lien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayer Steel position performs unexpectedly, Chung Lien 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 Chung Lien will offset losses from the drop in Chung Lien's long position.| Mayer Steel vs. Froch Enterprise Co | Mayer Steel vs. Hsin Kuang Steel | Mayer Steel vs. Chung Hung Steel | Mayer Steel vs. Tung Ho Steel |
| Chung Lien vs. Easywell Biomedicals | Chung Lien vs. Lelon Electronics Corp | Chung Lien vs. New Asia Construction | Chung Lien vs. Te Chang Construction |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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