Correlation Between China Steel and Dimension Computer
Can any of the company-specific risk be diversified away by investing in both China Steel and Dimension Computer 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 Dimension Computer 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 Dimension Computer Technology, you can compare the effects of market volatilities on China Steel and Dimension Computer 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 Dimension Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Dimension Computer.
Diversification Opportunities for China Steel and Dimension Computer
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Dimension is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Corp and Dimension Computer Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimension Computer 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 Dimension Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimension Computer has no effect on the direction of China Steel i.e., China Steel and Dimension Computer go up and down completely randomly.
Pair Corralation between China Steel and Dimension Computer
Assuming the 90 days trading horizon China Steel Corp is expected to under-perform the Dimension Computer. But the stock apears to be less risky and, when comparing its historical volatility, China Steel Corp is 16.73 times less risky than Dimension Computer. The stock trades about -0.25 of its potential returns per unit of risk. The Dimension Computer Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,480 in Dimension Computer Technology on December 5, 2024 and sell it today you would earn a total of 900.00 from holding Dimension Computer Technology or generate 36.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China Steel Corp vs. Dimension Computer Technology
Performance |
Timeline |
China Steel Corp |
Dimension Computer |
China Steel and Dimension Computer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Steel and Dimension Computer
The main advantage of trading using opposite China Steel and Dimension Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Dimension Computer 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 Dimension Computer will offset losses from the drop in Dimension Computer's long position.China Steel vs. Taiwan Semiconductor Co | China Steel vs. Mospec Semiconductor Corp | China Steel vs. Central Reinsurance Corp | China Steel vs. Dadi Early Childhood Education |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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