Correlation Between Yieh United and TMP Steel
Can any of the company-specific risk be diversified away by investing in both Yieh United and TMP 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 Yieh United and TMP Steel 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 TMP Steel, you can compare the effects of market volatilities on Yieh United and TMP 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 Yieh United with a short position of TMP Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yieh United and TMP Steel.
Diversification Opportunities for Yieh United and TMP Steel
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yieh and TMP is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Yieh United Steel and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP 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 TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of Yieh United i.e., Yieh United and TMP Steel go up and down completely randomly.
Pair Corralation between Yieh United and TMP Steel
Assuming the 90 days trading horizon Yieh United Steel is expected to generate 0.7 times more return on investment than TMP Steel. However, Yieh United Steel is 1.42 times less risky than TMP Steel. It trades about -0.08 of its potential returns per unit of risk. TMP Steel is currently generating about -0.21 per unit of risk. If you would invest 650.00 in Yieh United Steel on August 26, 2024 and sell it today you would lose (11.00) from holding Yieh United Steel or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yieh United Steel vs. TMP Steel
Performance |
| Timeline |
| Yieh United Steel |
| TMP Steel |
Yieh United and TMP Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yieh United and TMP Steel
The main advantage of trading using opposite Yieh United and TMP Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yieh United position performs unexpectedly, TMP 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 TMP Steel will offset losses from the drop in TMP Steel's long position.| Yieh United vs. Cayenne Entertainment Technology | Yieh United vs. Chunghwa Telecom Co | Yieh United vs. Jia Jie Biomedical | Yieh United vs. Simple Mart Retail |
| TMP Steel vs. China Steel Corp | TMP Steel vs. Chung Hung Steel | TMP Steel vs. Tung Ho Steel | TMP Steel vs. Feng Hsin 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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