Correlation Between Tang Eng and China Steel
Can any of the company-specific risk be diversified away by investing in both Tang Eng and China Steel 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 Tang Eng and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tang Eng Iron and China Steel Corp, you can compare the effects of market volatilities on Tang Eng and China Steel 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 Tang Eng with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tang Eng and China Steel.
Diversification Opportunities for Tang Eng and China Steel
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tang and China is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and China Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Corp and Tang Eng 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 Tang Eng Iron are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Corp has no effect on the direction of Tang Eng i.e., Tang Eng and China Steel go up and down completely randomly.
Pair Corralation between Tang Eng and China Steel
Assuming the 90 days trading horizon Tang Eng is expected to generate 110.35 times less return on investment than China Steel. But when comparing it to its historical volatility, Tang Eng Iron is 58.4 times less risky than China Steel. It trades about 0.02 of its potential returns per unit of risk. China Steel Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,420 in China Steel Corp on September 2, 2024 and sell it today you would lose (245.00) from holding China Steel Corp or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Tang Eng Iron vs. China Steel Corp
Performance |
| Timeline |
| Tang Eng Iron |
| China Steel Corp |
Tang Eng and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tang Eng and China Steel
The main advantage of trading using opposite Tang Eng and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tang Eng position performs unexpectedly, China Steel 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 China Steel will offset losses from the drop in China Steel's long position.| Tang Eng vs. Basso Industry Corp | Tang Eng vs. Chung Hsin Electric Machinery | Tang Eng vs. TYC Brother Industrial | Tang Eng vs. TECO Electric Machinery |
| China Steel vs. Synmosa Biopharma | China Steel vs. Taiwan Glass Ind | China Steel vs. Tong Tai Machine Tool | China Steel vs. Oriental Union Chemical |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |