Correlation Between Chung Fu and Aurora Corp
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Aurora Corp 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 Aurora Corp 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 Aurora Corp, you can compare the effects of market volatilities on Chung Fu and Aurora Corp 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 Aurora Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Aurora Corp.
Diversification Opportunities for Chung Fu and Aurora Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Aurora is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Aurora Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Corp 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 Aurora Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Corp has no effect on the direction of Chung Fu i.e., Chung Fu and Aurora Corp go up and down completely randomly.
Pair Corralation between Chung Fu and Aurora Corp
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Aurora Corp. In addition to that, Chung Fu is 4.28 times more volatile than Aurora Corp. It trades about -0.1 of its total potential returns per unit of risk. Aurora Corp is currently generating about -0.05 per unit of volatility. If you would invest 6,820 in Aurora Corp on August 24, 2024 and sell it today you would lose (60.00) from holding Aurora Corp or give up 0.88% 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. Aurora Corp
Performance |
| Timeline |
| Chung Fu Tex |
| Aurora Corp |
Chung Fu and Aurora Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Aurora Corp
The main advantage of trading using opposite Chung Fu and Aurora Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Aurora Corp 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 Aurora Corp will offset losses from the drop in Aurora Corp's long position.| Chung Fu vs. Integrated Service Technology | Chung Fu vs. Sunspring Metal Corp | Chung Fu vs. ADLINK Technology | Chung Fu vs. Simplo Technology Co |
| Aurora Corp vs. Synnex Technology International | Aurora Corp vs. CMC Magnetics Corp | Aurora Corp vs. Qisda Corp | Aurora Corp vs. D Link 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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