Correlation Between Cheng Shin and Century Iron
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Century Iron 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 Cheng Shin and Century Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheng Shin Rubber and Century Iron And, you can compare the effects of market volatilities on Cheng Shin and Century Iron 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 Cheng Shin with a short position of Century Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Century Iron.
Diversification Opportunities for Cheng Shin and Century Iron
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cheng and Century is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Century Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Iron And and Cheng Shin 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 Cheng Shin Rubber are associated (or correlated) with Century Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Iron And has no effect on the direction of Cheng Shin i.e., Cheng Shin and Century Iron go up and down completely randomly.
Pair Corralation between Cheng Shin and Century Iron
Assuming the 90 days trading horizon Cheng Shin is expected to generate 2.1 times less return on investment than Century Iron. But when comparing it to its historical volatility, Cheng Shin Rubber is 1.89 times less risky than Century Iron. It trades about 0.05 of its potential returns per unit of risk. Century Iron And is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,900 in Century Iron And on August 30, 2024 and sell it today you would earn a total of 7,050 from holding Century Iron And or generate 64.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Century Iron And
Performance |
| Timeline |
| Cheng Shin Rubber |
| Century Iron And |
Cheng Shin and Century Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Century Iron
The main advantage of trading using opposite Cheng Shin and Century Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Century Iron 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 Century Iron will offset losses from the drop in Century Iron's long position.| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen Corp |
| Century Iron vs. Swancor Holding Co | Century Iron vs. Hsin Kuang Steel | Century Iron vs. Ta Chen Stainless | Century Iron vs. Chung Hung Steel |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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