Correlation Between Iron Force and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both Iron Force 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 Iron Force and Chun Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Force Industrial and Chun Yuan Steel, you can compare the effects of market volatilities on Iron Force 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 Iron Force with a short position of Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Force and Chun Yuan.
Diversification Opportunities for Iron Force and Chun Yuan
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iron and Chun is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Iron Force Industrial 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 Iron Force 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 Iron Force Industrial 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 Iron Force i.e., Iron Force and Chun Yuan go up and down completely randomly.
Pair Corralation between Iron Force and Chun Yuan
Assuming the 90 days trading horizon Iron Force Industrial is expected to generate 1.44 times more return on investment than Chun Yuan. However, Iron Force is 1.44 times more volatile than Chun Yuan Steel. It trades about 0.03 of its potential returns per unit of risk. Chun Yuan Steel is currently generating about 0.03 per unit of risk. If you would invest 9,620 in Iron Force Industrial on August 29, 2024 and sell it today you would earn a total of 880.00 from holding Iron Force Industrial or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Force Industrial vs. Chun Yuan Steel
Performance |
| Timeline |
| Iron Force Industrial |
| Chun Yuan Steel |
Iron Force and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Force and Chun Yuan
The main advantage of trading using opposite Iron Force and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Force 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.| Iron Force vs. Hota Industrial Mfg | Iron Force vs. BizLink Holding | Iron Force vs. Cub Elecparts | Iron Force vs. Hu Lane Associate |
| Chun Yuan vs. China Man Made Fiber | Chun Yuan vs. USI Corp | Chun Yuan vs. China Petrochemical Development | Chun Yuan vs. Yulon Motor Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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