Correlation Between Yieh United and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both Yieh United 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 Yieh United and Chun Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yieh United Steel and Chun Yuan Steel, you can compare the effects of market volatilities on Yieh United 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 Yieh United with a short position of Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yieh United and Chun Yuan.
Diversification Opportunities for Yieh United and Chun Yuan
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yieh and Chun is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Yieh United Steel 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 Yieh United 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 Yieh United Steel 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 Yieh United i.e., Yieh United and Chun Yuan go up and down completely randomly.
Pair Corralation between Yieh United and Chun Yuan
Assuming the 90 days trading horizon Yieh United Steel is expected to under-perform the Chun Yuan. In addition to that, Yieh United is 1.11 times more volatile than Chun Yuan Steel. It trades about -0.02 of its total potential returns per unit of risk. Chun Yuan Steel is currently generating about 0.03 per unit of volatility. If you would invest 1,570 in Chun Yuan Steel on September 1, 2024 and sell it today you would earn a total of 275.00 from holding Chun Yuan Steel or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yieh United Steel vs. Chun Yuan Steel
Performance |
| Timeline |
| Yieh United Steel |
| Chun Yuan Steel |
Yieh United and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yieh United and Chun Yuan
The main advantage of trading using opposite Yieh United and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yieh United 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.| Yieh United vs. Basso Industry Corp | Yieh United vs. Chung Hsin Electric Machinery | Yieh United vs. TYC Brother Industrial | Yieh United vs. TECO Electric Machinery |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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