Correlation Between Chia Yi and Cleanaway

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

By analyzing existing cross correlation between Chia Yi Steel and Cleanaway Co, you can compare the effects of market volatilities on Chia Yi and Cleanaway 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 Chia Yi with a short position of Cleanaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Yi and Cleanaway.

Diversification Opportunities for Chia Yi and Cleanaway

-0.93

Correlation Coefficient

Chia Yi  Cleanaway

Pay attention - limited upside

The 3 months correlation between Chia and Cleanaway is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Chia Yi Steel and Cleanaway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway and Chia Yi 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 Chia Yi Steel are associated (or correlated) with Cleanaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway has no effect on the direction of Chia Yi i.e., Chia Yi and Cleanaway go up and down completely randomly.

Pair Corralation between Chia Yi and Cleanaway

Assuming the 90 days trading horizon Chia Yi Steel is expected to under-perform the Cleanaway. In addition to that, Chia Yi is 2.57 times more volatile than Cleanaway Co. It trades about -0.19 of its total potential returns per unit of risk. Cleanaway Co is currently generating about 0.28 per unit of volatility. If you would invest  17,950  in Cleanaway Co on December 29, 2024 and sell it today you would earn a total of  1,450  from holding Cleanaway Co or generate 8.08% return on investment over 90 days.

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

Chia Yi Steel  vs.  Cleanaway Co

Chia Yi Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chia Yi Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cleanaway

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cleanaway Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cleanaway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chia Yi and Cleanaway

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

The idea behind Chia Yi Steel and Cleanaway Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.