Correlation Between Hsin Kuang and Mayer Steel

Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and Mayer 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 Hsin Kuang and Mayer Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hsin Kuang Steel and Mayer Steel Pipe, you can compare the effects of market volatilities on Hsin Kuang and Mayer 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 Hsin Kuang with a short position of Mayer Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and Mayer Steel.

Diversification Opportunities for Hsin Kuang and Mayer Steel

0.23

Correlation Coefficient

Hsin Kuang  Mayer Steel

Modest diversification

The 3 months correlation between Hsin and Mayer is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and Mayer Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayer Steel Pipe and Hsin Kuang 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 Hsin Kuang Steel are associated (or correlated) with Mayer Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayer Steel Pipe has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and Mayer Steel go up and down completely randomly.

Pair Corralation between Hsin Kuang and Mayer Steel

Assuming the 90 days trading horizon Hsin Kuang Steel is expected to under-perform the Mayer Steel. In addition to that, Hsin Kuang is 1.1 times more volatile than Mayer Steel Pipe. It trades about -0.17 of its total potential returns per unit of risk. Mayer Steel Pipe is currently generating about 0.03 per unit of volatility. If you would invest  2,870  in Mayer Steel Pipe on September 3, 2024 and sell it today you would earn a total of  65.00  from holding Mayer Steel Pipe or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hsin Kuang Steel  vs.  Mayer Steel Pipe

Hsin Kuang Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hsin Kuang Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Mayer Steel Pipe

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mayer Steel Pipe are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mayer Steel is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hsin Kuang and Mayer Steel

The main advantage of trading using opposite Hsin Kuang and Mayer Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, Mayer 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 Mayer Steel will offset losses from the drop in Mayer Steel's long position.

The idea behind Hsin Kuang Steel and Mayer Steel Pipe pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.