Correlation Between Chow Steel and Central Retail
Can any of the company-specific risk be diversified away by investing in both Chow Steel and Central Retail 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 Chow Steel and Central Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chow Steel Industries and Central Retail, you can compare the effects of market volatilities on Chow Steel and Central Retail 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 Chow Steel with a short position of Central Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chow Steel and Central Retail.
Diversification Opportunities for Chow Steel and Central Retail
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chow and Central is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chow Steel Industries and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and Chow 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 Chow Steel Industries are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Chow Steel i.e., Chow Steel and Central Retail go up and down completely randomly.
Pair Corralation between Chow Steel and Central Retail
Assuming the 90 days trading horizon Chow Steel Industries is expected to under-perform the Central Retail. In addition to that, Chow Steel is 1.58 times more volatile than Central Retail. It trades about -0.12 of its total potential returns per unit of risk. Central Retail is currently generating about 0.04 per unit of volatility. If you would invest 3,225 in Central Retail on September 15, 2024 and sell it today you would earn a total of 125.00 from holding Central Retail or generate 3.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chow Steel Industries vs. Central Retail
Performance |
Timeline |
Chow Steel Industries |
Central Retail |
Chow Steel and Central Retail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chow Steel and Central Retail
The main advantage of trading using opposite Chow Steel and Central Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chow Steel position performs unexpectedly, Central Retail 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 Central Retail will offset losses from the drop in Central Retail's long position.Chow Steel vs. Chewathai Public | Chow Steel vs. Cho Thavee Public | Chow Steel vs. ASIA Capital Group | Chow Steel vs. CI Group Public |
Central Retail vs. CPR Gomu Industrial | Central Retail vs. Chow Steel Industries | Central Retail vs. Turnkey Communication Services | Central Retail vs. Symphony Communication Public |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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