Correlation Between Evergreen Steel and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both Evergreen Steel and Chun Yuan 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 Evergreen Steel and Chun Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen Steel Corp and Chun Yuan Steel, you can compare the effects of market volatilities on Evergreen Steel and Chun Yuan 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 Evergreen Steel with a short position of Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Steel and Chun Yuan.
Diversification Opportunities for Evergreen Steel and Chun Yuan
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evergreen and Chun is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Steel Corp and Chun Yuan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chun Yuan Steel and Evergreen Steel 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 Evergreen Steel Corp are associated (or correlated) with Chun Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chun Yuan Steel has no effect on the direction of Evergreen Steel i.e., Evergreen Steel and Chun Yuan go up and down completely randomly.
Pair Corralation between Evergreen Steel and Chun Yuan
Assuming the 90 days trading horizon Evergreen Steel Corp is expected to under-perform the Chun Yuan. In addition to that, Evergreen Steel is 1.08 times more volatile than Chun Yuan Steel. It trades about -0.21 of its total potential returns per unit of risk. Chun Yuan Steel is currently generating about 0.03 per unit of volatility. If you would invest 1,810 in Chun Yuan Steel on September 2, 2024 and sell it today you would earn a total of 35.00 from holding Chun Yuan Steel or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Steel Corp vs. Chun Yuan Steel
Performance |
| Timeline |
| Evergreen Steel Corp |
| Chun Yuan Steel |
Evergreen Steel and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Steel and Chun Yuan
The main advantage of trading using opposite Evergreen Steel and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Steel position performs unexpectedly, Chun Yuan 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 Chun Yuan will offset losses from the drop in Chun Yuan's long position.| Evergreen Steel vs. Yang Ming Marine | Evergreen Steel vs. Wan Hai Lines | Evergreen Steel vs. Hsin Kuang Steel | Evergreen Steel vs. Evergreen Marine Corp |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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