Correlation Between Chain Chon and Chia Yi
Can any of the company-specific risk be diversified away by investing in both Chain Chon 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 Chain Chon and Chia Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chain Chon Industrial and Chia Yi Steel, you can compare the effects of market volatilities on Chain Chon 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 Chain Chon with a short position of Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chain Chon and Chia Yi.
Diversification Opportunities for Chain Chon and Chia Yi
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chain and Chia is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chain Chon 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 Chain Chon 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 Chain Chon 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 Chain Chon i.e., Chain Chon and Chia Yi go up and down completely randomly.
Pair Corralation between Chain Chon and Chia Yi
Assuming the 90 days trading horizon Chain Chon Industrial is expected to under-perform the Chia Yi. But the stock apears to be less risky and, when comparing its historical volatility, Chain Chon Industrial is 1.19 times less risky than Chia Yi. The stock trades about -0.15 of its potential returns per unit of risk. The Chia Yi Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Chia Yi Steel on January 16, 2025 and sell it today you would earn a total of 10.00 from holding Chia Yi Steel or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Chain Chon Industrial vs. Chia Yi Steel
Performance |
| Timeline |
| Chain Chon Industrial |
| Chia Yi Steel |
Chain Chon and Chia Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chain Chon and Chia Yi
The main advantage of trading using opposite Chain Chon and Chia Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chain Chon 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.| Chain Chon vs. Information Technology Total | Chain Chon vs. China Metal Products | Chain Chon vs. Union Insurance Co | Chain Chon vs. Quanta Storage |
| Chia Yi vs. Catcher Technology Co | Chia Yi vs. Solar Applied Materials | Chia Yi vs. Evergreen Steel Corp | Chia Yi vs. China Metal Products |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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