Correlation Between TMP Steel and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both TMP Steel 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 TMP Steel and Chun Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMP Steel and Chun Yuan Steel, you can compare the effects of market volatilities on TMP Steel 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 TMP Steel with a short position of Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMP Steel and Chun Yuan.
Diversification Opportunities for TMP Steel and Chun Yuan
Very good diversification
The 3 months correlation between TMP and Chun is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding TMP Steel 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 TMP Steel 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 TMP Steel 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 TMP Steel i.e., TMP Steel and Chun Yuan go up and down completely randomly.
Pair Corralation between TMP Steel and Chun Yuan
Assuming the 90 days trading horizon TMP Steel is expected to under-perform the Chun Yuan. But the stock apears to be less risky and, when comparing its historical volatility, TMP Steel is 1.07 times less risky than Chun Yuan. The stock trades about -0.14 of its potential returns per unit of risk. The Chun Yuan Steel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,810 in Chun Yuan Steel on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Chun Yuan Steel or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMP Steel vs. Chun Yuan Steel
Performance |
| Timeline |
| TMP Steel |
| Chun Yuan Steel |
TMP Steel and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMP Steel and Chun Yuan
The main advantage of trading using opposite TMP Steel and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMP Steel 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.| TMP Steel vs. Energenesis Biomedical Co | TMP Steel vs. Universal Microelectronics Co | TMP Steel vs. Est Global Apparel | TMP Steel vs. Top Union Electronics |
| Chun Yuan vs. Hsin Kuang Steel | Chun Yuan vs. Chung Hung Steel | Chun Yuan vs. China Steel Structure | Chun Yuan vs. Feng Hsin Steel |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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