Correlation Between Taiwan Steel and Chinese Maritime
Can any of the company-specific risk be diversified away by investing in both Taiwan Steel and Chinese Maritime 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 Chinese Maritime 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 Chinese Maritime Transport, you can compare the effects of market volatilities on Taiwan Steel and Chinese Maritime 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 Chinese Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Steel and Chinese Maritime.
Diversification Opportunities for Taiwan Steel and Chinese Maritime
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Chinese is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Steel Union and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra 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 Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of Taiwan Steel i.e., Taiwan Steel and Chinese Maritime go up and down completely randomly.
Pair Corralation between Taiwan Steel and Chinese Maritime
Assuming the 90 days trading horizon Taiwan Steel Union is expected to under-perform the Chinese Maritime. In addition to that, Taiwan Steel is 1.64 times more volatile than Chinese Maritime Transport. It trades about -0.1 of its total potential returns per unit of risk. Chinese Maritime Transport is currently generating about -0.16 per unit of volatility. If you would invest 4,215 in Chinese Maritime Transport on October 7, 2024 and sell it today you would lose (135.00) from holding Chinese Maritime Transport or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Steel Union vs. Chinese Maritime Transport
Performance |
| Timeline |
| Taiwan Steel Union |
| Chinese Maritime Tra |
Taiwan Steel and Chinese Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Steel and Chinese Maritime
The main advantage of trading using opposite Taiwan Steel and Chinese Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Steel position performs unexpectedly, Chinese Maritime 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 Chinese Maritime will offset losses from the drop in Chinese Maritime'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 |
| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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