Correlation Between Chernan Metal and Baotek Industrial
Can any of the company-specific risk be diversified away by investing in both Chernan Metal and Baotek Industrial 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 Chernan Metal and Baotek Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chernan Metal Industrial and Baotek Industrial Materials, you can compare the effects of market volatilities on Chernan Metal and Baotek Industrial 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 Chernan Metal with a short position of Baotek Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chernan Metal and Baotek Industrial.
Diversification Opportunities for Chernan Metal and Baotek Industrial
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chernan and Baotek is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chernan Metal Industrial and Baotek Industrial Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baotek Industrial and Chernan Metal 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 Chernan Metal Industrial are associated (or correlated) with Baotek Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baotek Industrial has no effect on the direction of Chernan Metal i.e., Chernan Metal and Baotek Industrial go up and down completely randomly.
Pair Corralation between Chernan Metal and Baotek Industrial
Assuming the 90 days trading horizon Chernan Metal Industrial is expected to under-perform the Baotek Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Chernan Metal Industrial is 1.25 times less risky than Baotek Industrial. The stock trades about -0.11 of its potential returns per unit of risk. The Baotek Industrial Materials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,320 in Baotek Industrial Materials on August 28, 2024 and sell it today you would earn a total of 315.00 from holding Baotek Industrial Materials or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chernan Metal Industrial vs. Baotek Industrial Materials
Performance |
| Timeline |
| Chernan Metal Industrial |
| Baotek Industrial |
Chernan Metal and Baotek Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chernan Metal and Baotek Industrial
The main advantage of trading using opposite Chernan Metal and Baotek Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chernan Metal position performs unexpectedly, Baotek Industrial 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 Baotek Industrial will offset losses from the drop in Baotek Industrial's long position.| Chernan Metal vs. Evergreen Steel Corp | Chernan Metal vs. Apex Biotechnology Corp | Chernan Metal vs. Yeou Yih Steel | Chernan Metal vs. Tang Eng Iron |
| Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Tainan Spinning Co | Baotek Industrial vs. Shinkong Synthetic Fiber |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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