Correlation Between Taiwan Steel and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both Taiwan 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 Taiwan 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 Taiwan Steel Union and Chun Yuan Steel, you can compare the effects of market volatilities on Taiwan 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 Taiwan Steel with a short position of Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Steel and Chun Yuan.
Diversification Opportunities for Taiwan Steel and Chun Yuan
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Chun is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Steel Union 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 Taiwan 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 Taiwan Steel Union 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 Taiwan Steel i.e., Taiwan Steel and Chun Yuan go up and down completely randomly.
Pair Corralation between Taiwan Steel and Chun Yuan
Assuming the 90 days trading horizon Taiwan Steel Union is expected to generate 1.39 times more return on investment than Chun Yuan. However, Taiwan Steel is 1.39 times more volatile than Chun Yuan Steel. It trades about 0.03 of its potential returns per unit of risk. Chun Yuan Steel is currently generating about 0.03 per unit of risk. If you would invest 10,850 in Taiwan Steel Union on September 2, 2024 and sell it today you would earn a total of 250.00 from holding Taiwan Steel Union or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Steel Union vs. Chun Yuan Steel
Performance |
| Timeline |
| Taiwan Steel Union |
| Chun Yuan Steel |
Taiwan Steel and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Steel and Chun Yuan
The main advantage of trading using opposite Taiwan Steel and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan 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.| Taiwan Steel vs. Cleanaway Co | Taiwan Steel vs. Taiwan Secom Co | Taiwan Steel vs. TTET Union Corp | Taiwan Steel vs. Tehmag Foods |
| Chun Yuan vs. Basso Industry Corp | Chun Yuan vs. Chung Hsin Electric Machinery | Chun Yuan vs. TYC Brother Industrial | Chun Yuan vs. TECO Electric Machinery |
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.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |