Correlation Between Chuangs China and Allegheny Technologies

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

By analyzing existing cross correlation between Chuangs China Investments and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Chuangs China and Allegheny Technologies 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 Chuangs China with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Allegheny Technologies.

Diversification Opportunities for Chuangs China and Allegheny Technologies

0.51

Correlation Coefficient

Chuangs China  Allegheny Technologies

Very weak diversification

The 3 months correlation between Chuangs and Allegheny is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Chuangs China 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 Chuangs China Investments are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Chuangs China i.e., Chuangs China and Allegheny Technologies go up and down completely randomly.

Pair Corralation between Chuangs China and Allegheny Technologies

Assuming the 90 days horizon Chuangs China Investments is expected to under-perform the Allegheny Technologies. In addition to that, Chuangs China is 1.55 times more volatile than Allegheny Technologies Incorporated. It trades about -0.07 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.15 per unit of volatility. If you would invest  7,410  in Allegheny Technologies Incorporated on April 15, 2025 and sell it today you would earn a total of  372.00  from holding Allegheny Technologies Incorporated or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Chuangs China Investments  vs.  Allegheny Technologies Incorpo

Chuangs China Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chuangs China Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chuangs China reported solid returns over the last few months and may actually be approaching a breakup point.

Allegheny Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allegheny Technologies Incorporated are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Allegheny Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chuangs China and Allegheny Technologies

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

The idea behind Chuangs China Investments and Allegheny Technologies Incorporated 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.