Correlation Between Chung Fu and Global Brands
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Global Brands 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 Global Brands 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 Global Brands Manufacture, you can compare the effects of market volatilities on Chung Fu and Global Brands 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 Global Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Global Brands.
Diversification Opportunities for Chung Fu and Global Brands
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Global is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Global Brands Manufacture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Brands Manufacture 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 Global Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Brands Manufacture has no effect on the direction of Chung Fu i.e., Chung Fu and Global Brands go up and down completely randomly.
Pair Corralation between Chung Fu and Global Brands
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Global Brands. In addition to that, Chung Fu is 1.5 times more volatile than Global Brands Manufacture. It trades about -0.16 of its total potential returns per unit of risk. Global Brands Manufacture is currently generating about -0.14 per unit of volatility. If you would invest 5,820 in Global Brands Manufacture on August 30, 2024 and sell it today you would lose (270.00) from holding Global Brands Manufacture or give up 4.64% 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. Global Brands Manufacture
Performance |
| Timeline |
| Chung Fu Tex |
| Global Brands Manufacture |
Chung Fu and Global Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Global Brands
The main advantage of trading using opposite Chung Fu and Global Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Global Brands 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 Global Brands will offset losses from the drop in Global Brands' long position.| Chung Fu vs. Maxigen Biotech | Chung Fu vs. United Radiant Technology | Chung Fu vs. Microelectronics Technology | Chung Fu vs. Sun Max Tech |
| Global Brands vs. HannStar Board Corp | Global Brands vs. ITEQ Corp | Global Brands vs. Unitech Printed Circuit | Global Brands vs. Career Technology MFG |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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