Correlation Between TMP Steel and Sheng Yu
Can any of the company-specific risk be diversified away by investing in both TMP Steel and Sheng Yu 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 Sheng Yu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMP Steel and Sheng Yu Steel, you can compare the effects of market volatilities on TMP Steel and Sheng Yu 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 Sheng Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMP Steel and Sheng Yu.
Diversification Opportunities for TMP Steel and Sheng Yu
Good diversification
The 3 months correlation between TMP and Sheng is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding TMP Steel and Sheng Yu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sheng Yu 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 Sheng Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sheng Yu Steel has no effect on the direction of TMP Steel i.e., TMP Steel and Sheng Yu go up and down completely randomly.
Pair Corralation between TMP Steel and Sheng Yu
Assuming the 90 days trading horizon TMP Steel is expected to under-perform the Sheng Yu. In addition to that, TMP Steel is 1.52 times more volatile than Sheng Yu Steel. It trades about -0.16 of its total potential returns per unit of risk. Sheng Yu Steel is currently generating about -0.1 per unit of volatility. If you would invest 2,585 in Sheng Yu Steel on August 29, 2024 and sell it today you would lose (55.00) from holding Sheng Yu Steel or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMP Steel vs. Sheng Yu Steel
Performance |
| Timeline |
| TMP Steel |
| Sheng Yu Steel |
TMP Steel and Sheng Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMP Steel and Sheng Yu
The main advantage of trading using opposite TMP Steel and Sheng Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMP Steel position performs unexpectedly, Sheng Yu 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 Sheng Yu will offset losses from the drop in Sheng Yu's long position.| TMP Steel vs. China Steel Corp | TMP Steel vs. China Steel Corp | TMP Steel vs. Chung Hung Steel | TMP Steel vs. Tung Ho 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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