Correlation Between King Chou and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both King Chou 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 King Chou and Chun Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between King Chou Marine and Chun Yuan Steel, you can compare the effects of market volatilities on King Chou 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 King Chou with a short position of Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Chou and Chun Yuan.
Diversification Opportunities for King Chou and Chun Yuan
Modest diversification
The 3 months correlation between King and Chun is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding King Chou Marine 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 King Chou 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 King Chou Marine 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 King Chou i.e., King Chou and Chun Yuan go up and down completely randomly.
Pair Corralation between King Chou and Chun Yuan
Assuming the 90 days trading horizon King Chou Marine is expected to generate 1.09 times more return on investment than Chun Yuan. However, King Chou is 1.09 times more volatile than Chun Yuan Steel. It trades about 0.17 of its potential returns per unit of risk. Chun Yuan Steel is currently generating about -0.02 per unit of risk. If you would invest 4,020 in King Chou Marine on September 12, 2024 and sell it today you would earn a total of 160.00 from holding King Chou Marine or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
King Chou Marine vs. Chun Yuan Steel
Performance |
| Timeline |
| King Chou Marine |
| Chun Yuan Steel |
King Chou and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with King Chou and Chun Yuan
The main advantage of trading using opposite King Chou and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Chou 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.| King Chou vs. Chun Yuan Steel | King Chou vs. Chia Yi Steel | King Chou vs. ECOVE Environment Corp | King Chou vs. Yeou Yih Steel |
| Chun Yuan vs. Tainan Spinning Co | Chun Yuan vs. Lealea Enterprise Co | Chun Yuan vs. China Petrochemical Development | Chun Yuan vs. Ruentex Development 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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