Correlation Between Mayer Steel and Hung Chou

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Can any of the company-specific risk be diversified away by investing in both Mayer Steel and Hung Chou 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 Mayer Steel and Hung Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayer Steel Pipe and Hung Chou Fiber, you can compare the effects of market volatilities on Mayer Steel and Hung Chou 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 Mayer Steel with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayer Steel and Hung Chou.

Diversification Opportunities for Mayer Steel and Hung Chou

MayerHungDiversified AwayMayerHungDiversified Away100%
0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Mayer and Hung is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Mayer Steel Pipe and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and Mayer 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 Mayer Steel Pipe are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of Mayer Steel i.e., Mayer Steel and Hung Chou go up and down completely randomly.

Pair Corralation between Mayer Steel and Hung Chou

Assuming the 90 days trading horizon Mayer Steel Pipe is expected to generate 1.19 times more return on investment than Hung Chou. However, Mayer Steel is 1.19 times more volatile than Hung Chou Fiber. It trades about 0.04 of its potential returns per unit of risk. Hung Chou Fiber is currently generating about 0.03 per unit of risk. If you would invest  2,430  in Mayer Steel Pipe on November 27, 2024 and sell it today you would earn a total of  610.00  from holding Mayer Steel Pipe or generate 25.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mayer Steel Pipe  vs.  Hung Chou Fiber

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.152020 1413
       Timeline  
Mayer Steel Pipe 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mayer Steel Pipe are ranked lower than 4 (%) 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb26.52727.52828.52929.53030.5
Hung Chou Fiber 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Hung Chou Fiber are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Hung Chou may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1010.51111.512

Mayer Steel and Hung Chou Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.44-2.57-1.71-0.850.00.871.782.73.614.53 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.152020 1413
       Returns  

Pair Trading with Mayer Steel and Hung Chou

The main advantage of trading using opposite Mayer Steel and Hung Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayer Steel position performs unexpectedly, Hung Chou 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 Hung Chou will offset losses from the drop in Hung Chou's long position.
The idea behind Mayer Steel Pipe and Hung Chou Fiber 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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