Correlation Between Chung Fu and Ten Ren
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Ten Ren 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 Chung Fu and Ten Ren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Fu Tex International and Ten Ren Tea, you can compare the effects of market volatilities on Chung Fu and Ten Ren 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 Chung Fu with a short position of Ten Ren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Ten Ren.
Diversification Opportunities for Chung Fu and Ten Ren
Poor diversification
The 3 months correlation between Chung and Ten is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Ten Ren Tea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ten Ren Tea and Chung Fu 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 Chung Fu Tex International are associated (or correlated) with Ten Ren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ten Ren Tea has no effect on the direction of Chung Fu i.e., Chung Fu and Ten Ren go up and down completely randomly.
Pair Corralation between Chung Fu and Ten Ren
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Ten Ren. In addition to that, Chung Fu is 4.55 times more volatile than Ten Ren Tea. It trades about -0.29 of its total potential returns per unit of risk. Ten Ren Tea is currently generating about -0.26 per unit of volatility. If you would invest 3,265 in Ten Ren Tea on September 3, 2024 and sell it today you would lose (85.00) from holding Ten Ren Tea or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Fu Tex International vs. Ten Ren Tea
Performance |
| Timeline |
| Chung Fu Tex |
| Ten Ren Tea |
Chung Fu and Ten Ren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Ten Ren
The main advantage of trading using opposite Chung Fu and Ten Ren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Ten Ren 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 Ten Ren will offset losses from the drop in Ten Ren's long position.| Chung Fu vs. Shinkong Insurance Co | Chung Fu vs. PChome Online | Chung Fu vs. Mercuries Life Insurance | Chung Fu vs. Union Bank of |
| Ten Ren vs. Standard Foods Corp | Ten Ren vs. TTET Union Corp | Ten Ren vs. Great Wall Enterprise | Ten Ren vs. Lian Hwa Foods |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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