Correlation Between Century Iron and Chia Yi

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

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

Diversification Opportunities for Century Iron and Chia Yi

-0.33

Correlation Coefficient

Century Iron  Chia Yi

Very good diversification

The 3 months correlation between Century and Chia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Century Iron And and Chia Yi Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Yi Steel and Century Iron 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 Century Iron And are associated (or correlated) with Chia Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Yi Steel has no effect on the direction of Century Iron i.e., Century Iron and Chia Yi go up and down completely randomly.

Pair Corralation between Century Iron and Chia Yi

Assuming the 90 days trading horizon Century Iron And is expected to generate 1.93 times more return on investment than Chia Yi. However, Century Iron is 1.93 times more volatile than Chia Yi Steel. It trades about 0.17 of its potential returns per unit of risk. Chia Yi Steel is currently generating about -0.23 per unit of risk. If you would invest  16,300  in Century Iron And on December 2, 2024 and sell it today you would earn a total of  2,400  from holding Century Iron And or generate 14.72% return on investment over 90 days.

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

Century Iron And  vs.  Chia Yi Steel

Century Iron And

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Century Iron And are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Century Iron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 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 Century Iron and Chia Yi

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

The idea behind Century Iron And and Chia Yi Steel 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.