Correlation Between Chia Yi and King Chou

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Can any of the company-specific risk be diversified away by investing in both Chia Yi and King Chou 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 Chia Yi and King Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Yi Steel and King Chou Marine, you can compare the effects of market volatilities on Chia Yi and King Chou 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 Chia Yi with a short position of King Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Yi and King Chou.

Diversification Opportunities for Chia Yi and King Chou

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Chia and King is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chia Yi Steel and King Chou Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Chou Marine and Chia Yi 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 Chia Yi Steel are associated (or correlated) with King Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Chou Marine has no effect on the direction of Chia Yi i.e., Chia Yi and King Chou go up and down completely randomly.

Pair Corralation between Chia Yi and King Chou

Assuming the 90 days trading horizon Chia Yi Steel is expected to under-perform the King Chou. In addition to that, Chia Yi is 3.59 times more volatile than King Chou Marine. It trades about -0.02 of its total potential returns per unit of risk. King Chou Marine is currently generating about 0.04 per unit of volatility. If you would invest  3,905  in King Chou Marine on September 12, 2024 and sell it today you would earn a total of  275.00  from holding King Chou Marine or generate 7.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Chia Yi Steel  vs.  King Chou Marine

 Performance 
       Timeline  
Chia Yi Steel 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Chia Yi Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chia Yi may actually be approaching a critical reversion point that can send shares even higher in January 2025.
King Chou Marine 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in King Chou Marine are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, King Chou is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chia Yi and King Chou Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chia Yi and King Chou

The main advantage of trading using opposite Chia Yi and King Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Yi position performs unexpectedly, King Chou 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 King Chou will offset losses from the drop in King Chou's long position.
The idea behind Chia Yi Steel and King Chou Marine pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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