Correlation Between Chung Fu and Pou Chen
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Pou Chen 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 Pou Chen 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 Pou Chen Corp, you can compare the effects of market volatilities on Chung Fu and Pou Chen 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 Pou Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Pou Chen.
Diversification Opportunities for Chung Fu and Pou Chen
Excellent diversification
The 3 months correlation between Chung and Pou is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Pou Chen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pou Chen 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 Pou Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pou Chen Corp has no effect on the direction of Chung Fu i.e., Chung Fu and Pou Chen go up and down completely randomly.
Pair Corralation between Chung Fu and Pou Chen
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Pou Chen. In addition to that, Chung Fu is 1.3 times more volatile than Pou Chen Corp. It trades about -0.19 of its total potential returns per unit of risk. Pou Chen Corp is currently generating about 0.32 per unit of volatility. If you would invest 3,830 in Pou Chen Corp on August 28, 2024 and sell it today you would earn a total of 475.00 from holding Pou Chen Corp or generate 12.4% 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. Pou Chen Corp
Performance |
| Timeline |
| Chung Fu Tex |
| Pou Chen Corp |
Chung Fu and Pou Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Pou Chen
The main advantage of trading using opposite Chung Fu and Pou Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Pou Chen 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 Pou Chen will offset losses from the drop in Pou Chen's long position.| Chung Fu vs. Chainqui Construction Development | Chung Fu vs. Zinwell | Chung Fu vs. Symtek Automation Asia | Chung Fu vs. CTCI Corp |
| Pou Chen vs. Taiwan Semiconductor Manufacturing | Pou Chen vs. Hon Hai Precision | Pou Chen vs. MediaTek | Pou Chen vs. Chunghwa Telecom Co |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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