Correlation Between Iron Force and Chung Hung
Can any of the company-specific risk be diversified away by investing in both Iron Force and Chung Hung 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 Chung Hung 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 Chung Hung Steel, you can compare the effects of market volatilities on Iron Force and Chung Hung 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 Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Force and Chung Hung.
Diversification Opportunities for Iron Force and Chung Hung
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iron and Chung is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Iron Force Industrial and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung 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 Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of Iron Force i.e., Iron Force and Chung Hung go up and down completely randomly.
Pair Corralation between Iron Force and Chung Hung
Assuming the 90 days trading horizon Iron Force Industrial is expected to generate 1.17 times more return on investment than Chung Hung. However, Iron Force is 1.17 times more volatile than Chung Hung Steel. It trades about 0.03 of its potential returns per unit of risk. Chung Hung Steel is currently generating about -0.01 per unit of risk. If you would invest 8,481 in Iron Force Industrial on September 2, 2024 and sell it today you would earn a total of 1,819 from holding Iron Force Industrial or generate 21.45% 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. Chung Hung Steel
Performance |
| Timeline |
| Iron Force Industrial |
| Chung Hung Steel |
Iron Force and Chung Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Force and Chung Hung
The main advantage of trading using opposite Iron Force and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Force position performs unexpectedly, Chung Hung 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 Chung Hung will offset losses from the drop in Chung Hung's long position.| Iron Force vs. Hota Industrial Mfg | Iron Force vs. Cub Elecparts | Iron Force vs. Yulon Nissan Motor | Iron Force vs. Tong Yang Industry |
| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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