Correlation Between Standard Foods and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Standard Foods 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 Standard Foods and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Chung Hwa Food, you can compare the effects of market volatilities on Standard Foods 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 Standard Foods with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Chung Hwa.
Diversification Opportunities for Standard Foods and Chung Hwa
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Standard and Chung is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Chung Hwa Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Food and Standard Foods 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 Standard Foods Corp 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 Food has no effect on the direction of Standard Foods i.e., Standard Foods and Chung Hwa go up and down completely randomly.
Pair Corralation between Standard Foods and Chung Hwa
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Chung Hwa. In addition to that, Standard Foods is 1.71 times more volatile than Chung Hwa Food. It trades about -0.04 of its total potential returns per unit of risk. Chung Hwa Food is currently generating about -0.05 per unit of volatility. If you would invest 9,692 in Chung Hwa Food on October 23, 2024 and sell it today you would lose (1,092) from holding Chung Hwa Food or give up 11.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Chung Hwa Food
Performance |
| Timeline |
| Standard Foods Corp |
| Chung Hwa Food |
Standard Foods and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Chung Hwa
The main advantage of trading using opposite Standard Foods and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods 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.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
| Chung Hwa vs. Shinkong Insurance Co | Chung Hwa vs. Dadi Early Childhood Education | Chung Hwa vs. CHINA DEVELOPMENT FINANCIAL | Chung Hwa vs. Chung Lien Transportation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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