Correlation Between Chung Fu and Tecom
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Tecom 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 Tecom 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 Tecom Co, you can compare the effects of market volatilities on Chung Fu and Tecom 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 Tecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Tecom.
Diversification Opportunities for Chung Fu and Tecom
Very good diversification
The 3 months correlation between Chung and Tecom is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Tecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecom 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 Tecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecom has no effect on the direction of Chung Fu i.e., Chung Fu and Tecom go up and down completely randomly.
Pair Corralation between Chung Fu and Tecom
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Tecom. But the stock apears to be less risky and, when comparing its historical volatility, Chung Fu Tex International is 2.01 times less risky than Tecom. The stock trades about -0.25 of its potential returns per unit of risk. The Tecom Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,405 in Tecom Co on August 29, 2024 and sell it today you would earn a total of 210.00 from holding Tecom Co or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Fu Tex International vs. Tecom Co
Performance |
| Timeline |
| Chung Fu Tex |
| Tecom |
Chung Fu and Tecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Tecom
The main advantage of trading using opposite Chung Fu and Tecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Tecom 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 Tecom will offset losses from the drop in Tecom's long position.| Chung Fu vs. Chainqui Construction Development | Chung Fu vs. Zinwell | Chung Fu vs. Symtek Automation Asia | Chung Fu vs. CTCI Corp |
| Tecom vs. Microelectronics Technology | Tecom vs. D Link Corp | Tecom vs. CMC Magnetics Corp | Tecom vs. Accton Technology Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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