Correlation Between Great Wall and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Great Wall and Chung 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 Great Wall and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Great Wall and Chung 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 Great Wall with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Chung Hsin.
Diversification Opportunities for Great Wall and Chung Hsin
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Great and Chung is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Great Wall i.e., Great Wall and Chung Hsin go up and down completely randomly.
Pair Corralation between Great Wall and Chung Hsin
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.29 times more return on investment than Chung Hsin. However, Great Wall Enterprise is 3.43 times less risky than Chung Hsin. It trades about 0.29 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about -0.03 per unit of risk. If you would invest 5,150 in Great Wall Enterprise on September 3, 2024 and sell it today you would earn a total of 180.00 from holding Great Wall Enterprise or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Great Wall Enterprise |
| Chung Hsin Electric |
Great Wall and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Chung Hsin
The main advantage of trading using opposite Great Wall and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Chung 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 Chung Hsin will offset losses from the drop in Chung Hsin's long position.| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
| Chung Hsin vs. Universal Microelectronics Co | Chung Hsin vs. AVerMedia Technologies | Chung Hsin vs. Symtek Automation Asia | Chung Hsin vs. WiseChip Semiconductor |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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