Correlation Between Chia Hsin and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Chia Hsin and Chung Hwa 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 Hsin and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Hsin Cement and Chung Hwa Pulp, you can compare the effects of market volatilities on Chia Hsin and Chung Hwa 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 Hsin with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Hsin and Chung Hwa.
Diversification Opportunities for Chia Hsin and Chung Hwa
Average diversification
The 3 months correlation between Chia and Chung is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Chia Hsin Cement and Chung Hwa Pulp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Pulp and Chia Hsin 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 Hsin Cement are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Pulp has no effect on the direction of Chia Hsin i.e., Chia Hsin and Chung Hwa go up and down completely randomly.
Pair Corralation between Chia Hsin and Chung Hwa
Assuming the 90 days trading horizon Chia Hsin Cement is expected to generate 0.61 times more return on investment than Chung Hwa. However, Chia Hsin Cement is 1.64 times less risky than Chung Hwa. It trades about -0.02 of its potential returns per unit of risk. Chung Hwa Pulp is currently generating about -0.08 per unit of risk. If you would invest 1,895 in Chia Hsin Cement on September 14, 2024 and sell it today you would lose (115.00) from holding Chia Hsin Cement or give up 6.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chia Hsin Cement vs. Chung Hwa Pulp
Performance |
| Timeline |
| Chia Hsin Cement |
| Chung Hwa Pulp |
Chia Hsin and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Hsin and Chung Hwa
The main advantage of trading using opposite Chia Hsin and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Hsin position performs unexpectedly, Chung Hwa 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 Chung Hwa will offset losses from the drop in Chung Hwa's long position.| Chia Hsin vs. Tainan Spinning Co | Chia Hsin vs. Lealea Enterprise Co | Chia Hsin vs. China Petrochemical Development | Chia Hsin vs. Ruentex Development Co |
| Chung Hwa vs. Oriental Union Chemical | Chung Hwa vs. China Man Made Fiber | Chung Hwa vs. USI Corp | Chung Hwa vs. Chia Hsin Cement |
Check out your portfolio center.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 CEOs Directory module to screen CEOs from public companies around the world.
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