Correlation Between Song Ho and China Steel
Can any of the company-specific risk be diversified away by investing in both Song Ho 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 Song Ho and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Ho Industrial and China Steel Corp, you can compare the effects of market volatilities on Song Ho 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 Song Ho with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Ho and China Steel.
Diversification Opportunities for Song Ho and China Steel
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Song and China is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Song Ho 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 Song Ho 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 Song Ho 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 Song Ho i.e., Song Ho and China Steel go up and down completely randomly.
Pair Corralation between Song Ho and China Steel
Assuming the 90 days trading horizon Song Ho Industrial is expected to generate 0.45 times more return on investment than China Steel. However, Song Ho Industrial is 2.23 times less risky than China Steel. It trades about 0.1 of its potential returns per unit of risk. China Steel Corp is currently generating about -0.14 per unit of risk. If you would invest 2,740 in Song Ho Industrial on August 30, 2024 and sell it today you would earn a total of 30.00 from holding Song Ho Industrial or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Ho Industrial vs. China Steel Corp
Performance |
| Timeline |
| Song Ho Industrial |
| China Steel Corp |
Song Ho and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Ho and China Steel
The main advantage of trading using opposite Song Ho and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Ho 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.| Song Ho vs. Shinkong Insurance Co | Song Ho vs. Genovate Biotechnology Co | Song Ho vs. Johnson Health Tech | Song Ho vs. CHC Healthcare Group |
| China Steel vs. Formosa Plastics Corp | China Steel vs. Chunghwa Telecom Co | China Steel vs. Nan Ya Plastics | China Steel vs. Cathay Financial Holding |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |