Correlation Between Chung Fu and Li Peng
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Li Peng 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 Li Peng 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 Li Peng Enterprise, you can compare the effects of market volatilities on Chung Fu and Li Peng 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 Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Li Peng.
Diversification Opportunities for Chung Fu and Li Peng
Poor diversification
The 3 months correlation between Chung and 1447 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Li Peng Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Peng Enterprise 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 Li Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Peng Enterprise has no effect on the direction of Chung Fu i.e., Chung Fu and Li Peng go up and down completely randomly.
Pair Corralation between Chung Fu and Li Peng
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Li Peng. In addition to that, Chung Fu is 1.33 times more volatile than Li Peng Enterprise. It trades about -0.22 of its total potential returns per unit of risk. Li Peng Enterprise is currently generating about -0.06 per unit of volatility. If you would invest 795.00 in Li Peng Enterprise on September 1, 2024 and sell it today you would lose (19.00) from holding Li Peng Enterprise or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chung Fu Tex International vs. Li Peng Enterprise
Performance |
| Timeline |
| Chung Fu Tex |
| Li Peng Enterprise |
Chung Fu and Li Peng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Li Peng
The main advantage of trading using opposite Chung Fu and Li Peng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Li Peng 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 Li Peng will offset losses from the drop in Li Peng's long position.| Chung Fu vs. Formosa International Hotels | Chung Fu vs. Sunspring Metal Corp | Chung Fu vs. Fu Burg Industrial | Chung Fu vs. China Metal Products |
| Li Peng vs. GeneFerm Biotechnology Co | Li Peng vs. Tang Eng Iron | Li Peng vs. GeneReach Biotechnology | Li Peng vs. Tung Ho Steel |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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