Correlation Between Victory New and Chaheng Precision
Can any of the company-specific risk be diversified away by investing in both Victory New and Chaheng Precision 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 Victory New and Chaheng Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory New Materials and Chaheng Precision Co, you can compare the effects of market volatilities on Victory New and Chaheng Precision 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 Victory New with a short position of Chaheng Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Chaheng Precision.
Diversification Opportunities for Victory New and Chaheng Precision
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Victory and Chaheng is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Chaheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaheng Precision and Victory New 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 Victory New Materials are associated (or correlated) with Chaheng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaheng Precision has no effect on the direction of Victory New i.e., Victory New and Chaheng Precision go up and down completely randomly.
Pair Corralation between Victory New and Chaheng Precision
Assuming the 90 days trading horizon Victory New is expected to generate 10.59 times less return on investment than Chaheng Precision. But when comparing it to its historical volatility, Victory New Materials is 1.51 times less risky than Chaheng Precision. It trades about 0.01 of its potential returns per unit of risk. Chaheng Precision Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,091 in Chaheng Precision Co on September 4, 2024 and sell it today you would earn a total of 2,199 from holding Chaheng Precision Co or generate 31.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Victory New Materials vs. Chaheng Precision Co
Performance |
| Timeline |
| Victory New Materials |
| Chaheng Precision |
Victory New and Chaheng Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory New and Chaheng Precision
The main advantage of trading using opposite Victory New and Chaheng Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory New position performs unexpectedly, Chaheng Precision 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 Chaheng Precision will offset losses from the drop in Chaheng Precision's long position.| Victory New vs. Feng Tay Enterprises | Victory New vs. Pou Chen Corp | Victory New vs. Hsinli Chemical Industrial |
| Chaheng Precision vs. Loop Telecommunication International | Chaheng Precision vs. Tai Tung Communication | Chaheng Precision vs. Jia Jie Biomedical | Chaheng Precision vs. Energenesis Biomedical Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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