Correlation Between Chung Fu and Top Union
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Top Union 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 Top Union 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 Top Union Electronics, you can compare the effects of market volatilities on Chung Fu and Top Union 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 Top Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Top Union.
Diversification Opportunities for Chung Fu and Top Union
Very good diversification
The 3 months correlation between Chung and Top is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Top Union Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Union Electronics 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 Top Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Union Electronics has no effect on the direction of Chung Fu i.e., Chung Fu and Top Union go up and down completely randomly.
Pair Corralation between Chung Fu and Top Union
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Top Union. In addition to that, Chung Fu is 2.16 times more volatile than Top Union Electronics. It trades about -0.24 of its total potential returns per unit of risk. Top Union Electronics is currently generating about 0.18 per unit of volatility. If you would invest 3,240 in Top Union Electronics on August 29, 2024 and sell it today you would earn a total of 145.00 from holding Top Union Electronics or generate 4.48% 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. Top Union Electronics
Performance |
Timeline |
Chung Fu Tex |
Top Union Electronics |
Chung Fu and Top Union Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chung Fu and Top Union
The main advantage of trading using opposite Chung Fu and Top Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Top Union 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 Top Union will offset losses from the drop in Top Union's long position.Chung Fu vs. Arima Communications Corp | Chung Fu vs. Integrated Service Technology | Chung Fu vs. Microtips Technology | Chung Fu vs. Ichia Technologies |
Top Union vs. Sino American Silicon Products | Top Union vs. Powertech Technology | Top Union vs. Formosa Sumco Technology | Top Union vs. Radiant Opto Electronics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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