Correlation Between China Steel and Qualipoly Chemical
Can any of the company-specific risk be diversified away by investing in both China Steel and Qualipoly Chemical 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 China Steel and Qualipoly Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Steel Corp and Qualipoly Chemical Corp, you can compare the effects of market volatilities on China Steel and Qualipoly Chemical 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 China Steel with a short position of Qualipoly Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Qualipoly Chemical.
Diversification Opportunities for China Steel and Qualipoly Chemical
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Qualipoly is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Qualipoly Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualipoly Chemical Corp and China 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 China Steel Corp are associated (or correlated) with Qualipoly Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualipoly Chemical Corp has no effect on the direction of China Steel i.e., China Steel and Qualipoly Chemical go up and down completely randomly.
Pair Corralation between China Steel and Qualipoly Chemical
Assuming the 90 days trading horizon China Steel Corp is expected to under-perform the Qualipoly Chemical. In addition to that, China Steel is 1.05 times more volatile than Qualipoly Chemical Corp. It trades about -0.53 of its total potential returns per unit of risk. Qualipoly Chemical Corp is currently generating about 0.08 per unit of volatility. If you would invest 4,485 in Qualipoly Chemical Corp on September 25, 2024 and sell it today you would earn a total of 65.00 from holding Qualipoly Chemical Corp or generate 1.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Steel Corp vs. Qualipoly Chemical Corp
Performance |
Timeline |
China Steel Corp |
Qualipoly Chemical Corp |
China Steel and Qualipoly Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Steel and Qualipoly Chemical
The main advantage of trading using opposite China Steel and Qualipoly Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Qualipoly Chemical 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 Qualipoly Chemical will offset losses from the drop in Qualipoly Chemical's long position.China Steel vs. Formosa Plastics Corp | China Steel vs. Formosa Chemicals Fibre | China Steel vs. Formosa Petrochemical Corp | China Steel vs. Cathay Financial Holding |
Qualipoly Chemical vs. Formosa Plastics Corp | Qualipoly Chemical vs. Formosa Chemicals Fibre | Qualipoly Chemical vs. China Steel Corp | Qualipoly Chemical vs. Formosa Petrochemical Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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