Correlation Between Ta Chen and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Ta Chen and Salzgitter 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 Ta Chen and Salzgitter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Chen Stainless and Salzgitter AG ADR, you can compare the effects of market volatilities on Ta Chen and Salzgitter 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 Ta Chen with a short position of Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Chen and Salzgitter.
Diversification Opportunities for Ta Chen and Salzgitter
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2027 and Salzgitter is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ta Chen Stainless and Salzgitter AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG ADR and Ta Chen 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 Ta Chen Stainless are associated (or correlated) with Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG ADR has no effect on the direction of Ta Chen i.e., Ta Chen and Salzgitter go up and down completely randomly.
Pair Corralation between Ta Chen and Salzgitter
Assuming the 90 days trading horizon Ta Chen Stainless is expected to under-perform the Salzgitter. But the stock apears to be less risky and, when comparing its historical volatility, Ta Chen Stainless is 2.2 times less risky than Salzgitter. The stock trades about -0.03 of its potential returns per unit of risk. The Salzgitter AG ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Salzgitter AG ADR on September 12, 2024 and sell it today you would lose (31.00) from holding Salzgitter AG ADR or give up 14.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ta Chen Stainless vs. Salzgitter AG ADR
Performance |
| Timeline |
| Ta Chen Stainless |
| Salzgitter AG ADR |
Ta Chen and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Chen and Salzgitter
The main advantage of trading using opposite Ta Chen and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Chen position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter's long position.| Ta Chen vs. Tainan Spinning Co | Ta Chen vs. Lealea Enterprise Co | Ta Chen vs. China Petrochemical Development | Ta Chen vs. Ruentex Development Co |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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