Correlation Between Hsin Kuang and Century Iron

Can any of the company-specific risk be diversified away by investing in both Hsin Kuang 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 Hsin Kuang and Century Iron 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 Century Iron And, you can compare the effects of market volatilities on Hsin Kuang 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 Hsin Kuang with a short position of Century Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and Century Iron.

Diversification Opportunities for Hsin Kuang and Century Iron

0.63

Correlation Coefficient

Hsin Kuang  Century Iron

Poor diversification

The 3 months correlation between Hsin and Century is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel 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 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 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 Hsin Kuang i.e., Hsin Kuang and Century Iron go up and down completely randomly.

Pair Corralation between Hsin Kuang and Century Iron

Assuming the 90 days trading horizon Hsin Kuang is expected to generate 1.17 times less return on investment than Century Iron. In addition to that, Hsin Kuang is 1.42 times more volatile than Century Iron And. It trades about 0.18 of its total potential returns per unit of risk. Century Iron And is currently generating about 0.3 per unit of volatility. If you would invest  16,200  in Century Iron And on December 5, 2024 and sell it today you would earn a total of  2,100  from holding Century Iron And or generate 12.96% return on investment over 90 days.

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

Hsin Kuang Steel  vs.  Century Iron And

Hsin Kuang Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hsin Kuang Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hsin Kuang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Century Iron And

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Century Iron And are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Century Iron 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 Century Iron

The main advantage of trading using opposite Hsin Kuang and Century Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang 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 Hsin Kuang Steel 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.