Correlation Between Chia Hsin and Huang Hsiang
Can any of the company-specific risk be diversified away by investing in both Chia Hsin and Huang Hsiang 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 Huang Hsiang 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 Huang Hsiang Construction, you can compare the effects of market volatilities on Chia Hsin and Huang Hsiang 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 Huang Hsiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Hsin and Huang Hsiang.
Diversification Opportunities for Chia Hsin and Huang Hsiang
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chia and Huang is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Chia Hsin Cement and Huang Hsiang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huang Hsiang Construction 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 Huang Hsiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huang Hsiang Construction has no effect on the direction of Chia Hsin i.e., Chia Hsin and Huang Hsiang go up and down completely randomly.
Pair Corralation between Chia Hsin and Huang Hsiang
Assuming the 90 days trading horizon Chia Hsin Cement is expected to under-perform the Huang Hsiang. But the stock apears to be less risky and, when comparing its historical volatility, Chia Hsin Cement is 2.91 times less risky than Huang Hsiang. The stock trades about -0.02 of its potential returns per unit of risk. The Huang Hsiang Construction is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,140 in Huang Hsiang Construction on September 1, 2024 and sell it today you would earn a total of 1,450 from holding Huang Hsiang Construction or generate 23.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Chia Hsin Cement vs. Huang Hsiang Construction
Performance |
| Timeline |
| Chia Hsin Cement |
| Huang Hsiang Construction |
Chia Hsin and Huang Hsiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Hsin and Huang Hsiang
The main advantage of trading using opposite Chia Hsin and Huang Hsiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Hsin position performs unexpectedly, Huang Hsiang 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 Huang Hsiang will offset losses from the drop in Huang Hsiang's long position.| Chia Hsin vs. Basso Industry Corp | Chia Hsin vs. Chung Hsin Electric Machinery | Chia Hsin vs. TYC Brother Industrial | Chia Hsin vs. TECO Electric Machinery |
| Huang Hsiang vs. Ruentex Development Co | Huang Hsiang vs. CTCI Corp | Huang Hsiang vs. Information Technology Total | Huang Hsiang vs. Ennoconn Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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