Correlation Between STL Technology and Chia Yi
Can any of the company-specific risk be diversified away by investing in both STL Technology 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 STL Technology and Chia Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STL Technology Co and Chia Yi Steel, you can compare the effects of market volatilities on STL Technology 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 STL Technology with a short position of Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of STL Technology and Chia Yi.
Diversification Opportunities for STL Technology and Chia Yi
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STL and Chia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding STL Technology Co 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 STL Technology 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 STL Technology Co 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 STL Technology i.e., STL Technology and Chia Yi go up and down completely randomly.
Pair Corralation between STL Technology and Chia Yi
Assuming the 90 days trading horizon STL Technology Co is expected to generate 1.32 times more return on investment than Chia Yi. However, STL Technology is 1.32 times more volatile than Chia Yi Steel. It trades about 0.23 of its potential returns per unit of risk. Chia Yi Steel is currently generating about 0.01 per unit of risk. If you would invest 2,500 in STL Technology Co on November 3, 2024 and sell it today you would earn a total of 4,710 from holding STL Technology Co or generate 188.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STL Technology Co vs. Chia Yi Steel
Performance |
| Timeline |
| STL Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Chia Yi Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
STL Technology and Chia Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STL Technology and Chia Yi
The main advantage of trading using opposite STL Technology and Chia Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STL Technology 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.The idea behind STL Technology Co and Chia Yi Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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