Correlation Between Trk Corp and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Trk Corp and Chi Hua 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 Trk Corp and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trk Corp and Chi Hua Fitness, you can compare the effects of market volatilities on Trk Corp and Chi Hua 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 Trk Corp with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trk Corp and Chi Hua.
Diversification Opportunities for Trk Corp and Chi Hua
Excellent diversification
The 3 months correlation between Trk and Chi is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Trk Corp and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Trk Corp 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 Trk Corp are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Trk Corp i.e., Trk Corp and Chi Hua go up and down completely randomly.
Pair Corralation between Trk Corp and Chi Hua
Assuming the 90 days trading horizon Trk Corp is expected to generate 3.77 times less return on investment than Chi Hua. But when comparing it to its historical volatility, Trk Corp is 7.25 times less risky than Chi Hua. It trades about 0.05 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,576 in Chi Hua Fitness on August 26, 2024 and sell it today you would lose (2,826) from holding Chi Hua Fitness or give up 42.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trk Corp vs. Chi Hua Fitness
Performance |
| Timeline |
| Trk Corp |
| Chi Hua Fitness |
Trk Corp and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trk Corp and Chi Hua
The main advantage of trading using opposite Trk Corp and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trk Corp position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Trk Corp vs. Formosa Taffeta Co | Trk Corp vs. Tainan Spinning Co | Trk Corp vs. Carnival Industrial Corp | Trk Corp vs. Lily Textile Co |
| Chi Hua vs. Giant Manufacturing Co | Chi Hua vs. Johnson Health Tech | Chi Hua vs. Sports Gear Co | Chi Hua vs. Power Wind Health |
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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