Correlation Between Vulcan Steel and Austchina Holdings
Can any of the company-specific risk be diversified away by investing in both Vulcan Steel and Austchina Holdings 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 Vulcan Steel and Austchina Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Steel and Austchina Holdings, you can compare the effects of market volatilities on Vulcan Steel and Austchina Holdings 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 Vulcan Steel with a short position of Austchina Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Steel and Austchina Holdings.
Diversification Opportunities for Vulcan Steel and Austchina Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vulcan and Austchina is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Steel and Austchina Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austchina Holdings and Vulcan 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 Vulcan Steel are associated (or correlated) with Austchina Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austchina Holdings has no effect on the direction of Vulcan Steel i.e., Vulcan Steel and Austchina Holdings go up and down completely randomly.
Pair Corralation between Vulcan Steel and Austchina Holdings
Assuming the 90 days trading horizon Vulcan Steel is expected to generate 10.6 times less return on investment than Austchina Holdings. But when comparing it to its historical volatility, Vulcan Steel is 4.56 times less risky than Austchina Holdings. It trades about 0.01 of its potential returns per unit of risk. Austchina Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 0.70 in Austchina Holdings on September 14, 2024 and sell it today you would lose (0.60) from holding Austchina Holdings or give up 85.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Steel vs. Austchina Holdings
Performance |
| Timeline |
| Vulcan Steel |
| Austchina Holdings |
Vulcan Steel and Austchina Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Steel and Austchina Holdings
The main advantage of trading using opposite Vulcan Steel and Austchina Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Steel position performs unexpectedly, Austchina Holdings 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 Austchina Holdings will offset losses from the drop in Austchina Holdings' long position.| Vulcan Steel vs. Aussie Broadband | Vulcan Steel vs. Hansen Technologies | Vulcan Steel vs. Saferoads Holdings | Vulcan Steel vs. Mach7 Technologies |
| Austchina Holdings vs. Regal Investment | Austchina Holdings vs. Vulcan Steel | Austchina Holdings vs. Iron Road | Austchina Holdings vs. Australian United Investment |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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