Correlation Between Taiwan Steel and Mayer Steel
Can any of the company-specific risk be diversified away by investing in both Taiwan Steel and Mayer 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 Taiwan Steel and Mayer Steel 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 Mayer Steel Pipe, you can compare the effects of market volatilities on Taiwan Steel and Mayer 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 Taiwan Steel with a short position of Mayer Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Steel and Mayer Steel.
Diversification Opportunities for Taiwan Steel and Mayer Steel
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Mayer is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Steel Union and Mayer Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayer Steel Pipe 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 Mayer Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayer Steel Pipe has no effect on the direction of Taiwan Steel i.e., Taiwan Steel and Mayer Steel go up and down completely randomly.
Pair Corralation between Taiwan Steel and Mayer Steel
Assuming the 90 days trading horizon Taiwan Steel Union is expected to under-perform the Mayer Steel. In addition to that, Taiwan Steel is 1.42 times more volatile than Mayer Steel Pipe. It trades about -0.25 of its total potential returns per unit of risk. Mayer Steel Pipe is currently generating about 0.28 per unit of volatility. If you would invest 2,760 in Mayer Steel Pipe on September 4, 2024 and sell it today you would earn a total of 150.00 from holding Mayer Steel Pipe or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Steel Union vs. Mayer Steel Pipe
Performance |
| Timeline |
| Taiwan Steel Union |
| Mayer Steel Pipe |
Taiwan Steel and Mayer Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Steel and Mayer Steel
The main advantage of trading using opposite Taiwan Steel and Mayer Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Steel position performs unexpectedly, Mayer 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 Mayer Steel will offset losses from the drop in Mayer Steel's long position.| Taiwan Steel vs. Cleanaway Co | Taiwan Steel vs. Sunny Friend Environmental | Taiwan Steel vs. Topco Scientific Co | Taiwan Steel vs. Kung Long Batteries |
| Mayer Steel vs. Froch Enterprise Co | Mayer Steel vs. Hsin Kuang Steel | Mayer Steel vs. Chung Hung Steel | Mayer 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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