Correlation Between Universal Cement and Chia Hsin
Can any of the company-specific risk be diversified away by investing in both Universal Cement and Chia Hsin 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 Universal Cement and Chia Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Cement Corp and Chia Hsin Cement, you can compare the effects of market volatilities on Universal Cement and Chia Hsin 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 Universal Cement with a short position of Chia Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Cement and Chia Hsin.
Diversification Opportunities for Universal Cement and Chia Hsin
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Universal and Chia is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Universal Cement Corp and Chia Hsin Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Hsin Cement and Universal Cement 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 Universal Cement Corp are associated (or correlated) with Chia Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Hsin Cement has no effect on the direction of Universal Cement i.e., Universal Cement and Chia Hsin go up and down completely randomly.
Pair Corralation between Universal Cement and Chia Hsin
Assuming the 90 days trading horizon Universal Cement Corp is expected to under-perform the Chia Hsin. In addition to that, Universal Cement is 1.43 times more volatile than Chia Hsin Cement. It trades about -0.07 of its total potential returns per unit of risk. Chia Hsin Cement is currently generating about -0.02 per unit of volatility. If you would invest 1,865 in Chia Hsin Cement on September 1, 2024 and sell it today you would lose (70.00) from holding Chia Hsin Cement or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Cement Corp vs. Chia Hsin Cement
Performance |
| Timeline |
| Universal Cement Corp |
| Chia Hsin Cement |
Universal Cement and Chia Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Cement and Chia Hsin
The main advantage of trading using opposite Universal Cement and Chia Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Cement position performs unexpectedly, Chia Hsin 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 Hsin will offset losses from the drop in Chia Hsin's long position.| Universal Cement vs. Chia Hsin Cement | Universal Cement vs. Hsing Ta Cement | Universal Cement vs. USI Corp | Universal Cement vs. Asia Polymer Corp |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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