Correlation Between Trade Van and China Steel
Can any of the company-specific risk be diversified away by investing in both Trade Van 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 Trade Van and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trade Van Information Services and China Steel Corp, you can compare the effects of market volatilities on Trade Van 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 Trade Van with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and China Steel.
Diversification Opportunities for Trade Van and China Steel
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Trade and China is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services 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 Trade Van 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 Trade Van Information Services 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 Trade Van i.e., Trade Van and China Steel go up and down completely randomly.
Pair Corralation between Trade Van and China Steel
Assuming the 90 days trading horizon Trade Van Information Services is expected to generate 2.97 times more return on investment than China Steel. However, Trade Van is 2.97 times more volatile than China Steel Corp. It trades about 0.03 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 8,040 in Trade Van Information Services on September 4, 2024 and sell it today you would earn a total of 40.00 from holding Trade Van Information Services or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Trade Van Information Services vs. China Steel Corp
Performance |
| Timeline |
| Trade Van Information |
| China Steel Corp |
Trade Van and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Van and China Steel
The main advantage of trading using opposite Trade Van and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Van 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.| Trade Van vs. Taiwan Semiconductor Manufacturing | Trade Van vs. Yang Ming Marine | Trade Van vs. AU Optronics | Trade Van vs. Nan Ya Plastics |
| China Steel vs. Thunder Tiger Corp | China Steel vs. Synmosa Biopharma | China Steel vs. Oriental Union Chemical | China Steel 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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