Correlation Between Century Iron and Tung Ho
Can any of the company-specific risk be diversified away by investing in both Century Iron and Tung Ho 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 Tung Ho 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 Tung Ho Steel, you can compare the effects of market volatilities on Century Iron and Tung Ho 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 Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Iron and Tung Ho.
Diversification Opportunities for Century Iron and Tung Ho
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Tung is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Century Iron And and Tung Ho Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Steel 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 Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Steel has no effect on the direction of Century Iron i.e., Century Iron and Tung Ho go up and down completely randomly.
Pair Corralation between Century Iron and Tung Ho
Assuming the 90 days trading horizon Century Iron And is expected to under-perform the Tung Ho. In addition to that, Century Iron is 2.02 times more volatile than Tung Ho Steel. It trades about -0.29 of its total potential returns per unit of risk. Tung Ho Steel is currently generating about -0.15 per unit of volatility. If you would invest 7,370 in Tung Ho Steel on September 1, 2024 and sell it today you would lose (320.00) from holding Tung Ho Steel or give up 4.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Iron And vs. Tung Ho Steel
Performance |
| Timeline |
| Century Iron And |
| Tung Ho Steel |
Century Iron and Tung Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Iron and Tung Ho
The main advantage of trading using opposite Century Iron and Tung Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Iron position performs unexpectedly, Tung Ho 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 Tung Ho will offset losses from the drop in Tung Ho'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 |
| Tung Ho vs. Basso Industry Corp | Tung Ho vs. Chung Hsin Electric Machinery | Tung Ho vs. TYC Brother Industrial | Tung Ho 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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