Correlation Between Century Iron and Basso Industry
Can any of the company-specific risk be diversified away by investing in both Century Iron and Basso Industry 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 Century Iron and Basso Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Iron And and Basso Industry Corp, you can compare the effects of market volatilities on Century Iron and Basso Industry 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 Century Iron with a short position of Basso Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Iron and Basso Industry.
Diversification Opportunities for Century Iron and Basso Industry
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Basso is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Century Iron And and Basso Industry Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basso Industry Corp and Century Iron 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 Century Iron And are associated (or correlated) with Basso Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basso Industry Corp has no effect on the direction of Century Iron i.e., Century Iron and Basso Industry go up and down completely randomly.
Pair Corralation between Century Iron and Basso Industry
Assuming the 90 days trading horizon Century Iron And is expected to generate 2.95 times more return on investment than Basso Industry. However, Century Iron is 2.95 times more volatile than Basso Industry Corp. It trades about 0.06 of its potential returns per unit of risk. Basso Industry Corp is currently generating about 0.01 per unit of risk. If you would invest 8,830 in Century Iron And on September 1, 2024 and sell it today you would earn a total of 8,670 from holding Century Iron And or generate 98.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Iron And vs. Basso Industry Corp
Performance |
| Timeline |
| Century Iron And |
| Basso Industry Corp |
Century Iron and Basso Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Iron and Basso Industry
The main advantage of trading using opposite Century Iron and Basso Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Iron position performs unexpectedly, Basso Industry 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 Basso Industry will offset losses from the drop in Basso Industry's long position.| Century Iron vs. Basso Industry Corp | Century Iron vs. Chung Hsin Electric Machinery | Century Iron vs. TYC Brother Industrial | Century Iron vs. TECO Electric Machinery |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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