Correlation Between Sheng Yu and Chia Yi
Can any of the company-specific risk be diversified away by investing in both Sheng Yu and Chia Yi 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 Sheng Yu and Chia Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sheng Yu Steel and Chia Yi Steel, you can compare the effects of market volatilities on Sheng Yu and Chia Yi 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 Sheng Yu with a short position of Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sheng Yu and Chia Yi.
Diversification Opportunities for Sheng Yu and Chia Yi
Good diversification
The 3 months correlation between Sheng and Chia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sheng Yu Steel and Chia Yi Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Yi Steel and Sheng Yu 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 Sheng Yu Steel are associated (or correlated) with Chia Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Yi Steel has no effect on the direction of Sheng Yu i.e., Sheng Yu and Chia Yi go up and down completely randomly.
Pair Corralation between Sheng Yu and Chia Yi
Assuming the 90 days trading horizon Sheng Yu Steel is expected to under-perform the Chia Yi. But the stock apears to be less risky and, when comparing its historical volatility, Sheng Yu Steel is 5.42 times less risky than Chia Yi. The stock trades about -0.29 of its potential returns per unit of risk. The Chia Yi Steel is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,035 in Chia Yi Steel on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Chia Yi Steel or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sheng Yu Steel vs. Chia Yi Steel
Performance |
| Timeline |
| Sheng Yu Steel |
| Chia Yi Steel |
Sheng Yu and Chia Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sheng Yu and Chia Yi
The main advantage of trading using opposite Sheng Yu and Chia Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sheng Yu position performs unexpectedly, Chia Yi 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 Chia Yi will offset losses from the drop in Chia Yi's long position.| Sheng Yu vs. Yieh Phui Enterprise | Sheng Yu vs. Tung Ho Steel | Sheng Yu vs. Feng Hsin Steel | Sheng Yu vs. Chung Hung Steel |
| Chia Yi vs. Yang Ming Marine | Chia Yi vs. Wan Hai Lines | Chia Yi vs. Hsin Kuang Steel | Chia Yi vs. Evergreen Marine Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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