Correlation Between Skardin Industrial and China Steel
Can any of the company-specific risk be diversified away by investing in both Skardin Industrial and China Steel 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 Skardin Industrial and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skardin Industrial and China Steel Corp, you can compare the effects of market volatilities on Skardin Industrial and China Steel 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 Skardin Industrial with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skardin Industrial and China Steel.
Diversification Opportunities for Skardin Industrial and China Steel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skardin and China is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Skardin Industrial and China Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Corp and Skardin Industrial 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 Skardin Industrial are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Corp has no effect on the direction of Skardin Industrial i.e., Skardin Industrial and China Steel go up and down completely randomly.
Pair Corralation between Skardin Industrial and China Steel
Assuming the 90 days trading horizon Skardin Industrial is expected to generate 14.33 times more return on investment than China Steel. However, Skardin Industrial is 14.33 times more volatile than China Steel Corp. It trades about 0.03 of its potential returns per unit of risk. China Steel Corp is currently generating about -0.24 per unit of risk. If you would invest 5,880 in Skardin Industrial on November 30, 2024 and sell it today you would earn a total of 120.00 from holding Skardin Industrial or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skardin Industrial vs. China Steel Corp
Performance |
| Timeline |
| Skardin Industrial |
| China Steel Corp |
Skardin Industrial and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skardin Industrial and China Steel
The main advantage of trading using opposite Skardin Industrial and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skardin Industrial position performs unexpectedly, China Steel 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 China Steel will offset losses from the drop in China Steel's long position.| Skardin Industrial vs. Xxentria Technology Materials | Skardin Industrial vs. Tradetool Auto Co | Skardin Industrial vs. Hi Lai Foods Co | Skardin Industrial vs. Johnson Health Tech |
| China Steel vs. Castles Technology Co | China Steel vs. Univacco Technology | China Steel vs. Grand Ocean Retail | China Steel vs. STL Technology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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