Correlation Between Taiwan Steel and Evergreen Steel
Can any of the company-specific risk be diversified away by investing in both Taiwan Steel and Evergreen 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 Evergreen 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 Evergreen Steel Corp, you can compare the effects of market volatilities on Taiwan Steel and Evergreen 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 Evergreen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Steel and Evergreen Steel.
Diversification Opportunities for Taiwan Steel and Evergreen Steel
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Taiwan and Evergreen is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Steel Union and Evergreen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Steel Corp 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 Evergreen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Steel Corp has no effect on the direction of Taiwan Steel i.e., Taiwan Steel and Evergreen Steel go up and down completely randomly.
Pair Corralation between Taiwan Steel and Evergreen Steel
Assuming the 90 days trading horizon Taiwan Steel Union is expected to generate 1.29 times more return on investment than Evergreen Steel. However, Taiwan Steel is 1.29 times more volatile than Evergreen Steel Corp. It trades about 0.03 of its potential returns per unit of risk. Evergreen Steel Corp is currently generating about -0.21 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Steel Union vs. Evergreen Steel Corp
Performance |
| Timeline |
| Taiwan Steel Union |
| Evergreen Steel Corp |
Taiwan Steel and Evergreen Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Steel and Evergreen Steel
The main advantage of trading using opposite Taiwan Steel and Evergreen Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Steel position performs unexpectedly, Evergreen 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 Evergreen Steel will offset losses from the drop in Evergreen Steel'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 |
| Evergreen Steel vs. Yang Ming Marine | Evergreen Steel vs. Wan Hai Lines | Evergreen Steel vs. Hsin Kuang Steel | Evergreen Steel vs. Evergreen Marine Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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