Correlation Between Uni President and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both Uni President and Cheng Shin 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 Uni President and Cheng Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uni President Enterprises Corp and Cheng Shin Rubber, you can compare the effects of market volatilities on Uni President and Cheng Shin 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 Uni President with a short position of Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and Cheng Shin.
Diversification Opportunities for Uni President and Cheng Shin
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Uni and Cheng is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Uni President Enterprises Corp and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber and Uni President 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 Uni President Enterprises Corp are associated (or correlated) with Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of Uni President i.e., Uni President and Cheng Shin go up and down completely randomly.
Pair Corralation between Uni President and Cheng Shin
Assuming the 90 days trading horizon Uni President Enterprises Corp is expected to generate 0.59 times more return on investment than Cheng Shin. However, Uni President Enterprises Corp is 1.68 times less risky than Cheng Shin. It trades about 0.08 of its potential returns per unit of risk. Cheng Shin Rubber is currently generating about 0.04 per unit of risk. If you would invest 6,760 in Uni President Enterprises Corp on August 25, 2024 and sell it today you would earn a total of 1,750 from holding Uni President Enterprises Corp or generate 25.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uni President Enterprises Corp vs. Cheng Shin Rubber
Performance |
| Timeline |
| Uni President Enterp |
| Cheng Shin Rubber |
Uni President and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uni President and Cheng Shin
The main advantage of trading using opposite Uni President and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President position performs unexpectedly, Cheng Shin 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 Cheng Shin will offset losses from the drop in Cheng Shin's long position.| Uni President vs. President Chain Store | Uni President vs. Formosa Plastics Corp | Uni President vs. Nan Ya Plastics | Uni President vs. Taiwan Cement Corp |
| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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