Correlation Between Iron Force and Chia Yi
Can any of the company-specific risk be diversified away by investing in both Iron Force and Chia Yi 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 Chia Yi 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 Chia Yi Steel, you can compare the effects of market volatilities on Iron Force and Chia Yi 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 Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Force and Chia Yi.
Diversification Opportunities for Iron Force and Chia Yi
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Iron and Chia is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Iron Force Industrial and Chia Yi Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Yi 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 Chia Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Yi Steel has no effect on the direction of Iron Force i.e., Iron Force and Chia Yi go up and down completely randomly.
Pair Corralation between Iron Force and Chia Yi
Assuming the 90 days trading horizon Iron Force Industrial is expected to under-perform the Chia Yi. But the stock apears to be less risky and, when comparing its historical volatility, Iron Force Industrial is 1.78 times less risky than Chia Yi. The stock trades about -0.08 of its potential returns per unit of risk. The Chia Yi Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,035 in Chia Yi Steel on August 29, 2024 and sell it today you would earn a total of 60.00 from holding Chia Yi Steel or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Force Industrial vs. Chia Yi Steel
Performance |
| Timeline |
| Iron Force Industrial |
| Chia Yi Steel |
Iron Force and Chia Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Force and Chia Yi
The main advantage of trading using opposite Iron Force and Chia Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Force position performs unexpectedly, Chia Yi 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 Chia Yi will offset losses from the drop in Chia Yi'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 |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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