Correlation Between Ta Chen and Century Iron

Can any of the company-specific risk be diversified away by investing in both Ta Chen and Century Iron 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 Ta Chen and Century Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ta Chen Stainless and Century Iron And, you can compare the effects of market volatilities on Ta Chen and Century Iron 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 Ta Chen with a short position of Century Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Chen and Century Iron.

Diversification Opportunities for Ta Chen and Century Iron

0.02

Correlation Coefficient

Ta Chen  Century Iron

Significant diversification

The 3 months correlation between 2027 and Century is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ta Chen Stainless and Century Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Iron And and Ta Chen 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 Ta Chen Stainless are associated (or correlated) with Century Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Iron And has no effect on the direction of Ta Chen i.e., Ta Chen and Century Iron go up and down completely randomly.

Pair Corralation between Ta Chen and Century Iron

Assuming the 90 days trading horizon Ta Chen Stainless is expected to generate 0.57 times more return on investment than Century Iron. However, Ta Chen Stainless is 1.76 times less risky than Century Iron. It trades about -0.05 of its potential returns per unit of risk. Century Iron And is currently generating about -0.15 per unit of risk. If you would invest  3,700  in Ta Chen Stainless on September 15, 2024 and sell it today you would lose (490.00) from holding Ta Chen Stainless or give up 13.24% of portfolio value over 90 days.

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

Ta Chen Stainless  vs.  Century Iron And

Ta Chen Stainless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ta Chen Stainless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ta Chen is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Century Iron And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Iron And has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ta Chen and Century Iron

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

The idea behind Ta Chen Stainless and Century Iron And 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.