Correlation Between Chung Fu and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Giant Manufacturing 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 Giant Manufacturing 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 Giant Manufacturing Co, you can compare the effects of market volatilities on Chung Fu and Giant Manufacturing 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 Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Giant Manufacturing.
Diversification Opportunities for Chung Fu and Giant Manufacturing
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Giant is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing 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 Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of Chung Fu i.e., Chung Fu and Giant Manufacturing go up and down completely randomly.
Pair Corralation between Chung Fu and Giant Manufacturing
Assuming the 90 days trading horizon Chung Fu Tex International is expected to generate 1.17 times more return on investment than Giant Manufacturing. However, Chung Fu is 1.17 times more volatile than Giant Manufacturing Co. It trades about -0.25 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.38 per unit of risk. If you would invest 4,745 in Chung Fu Tex International on August 29, 2024 and sell it today you would lose (595.00) from holding Chung Fu Tex International or give up 12.54% 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. Giant Manufacturing Co
Performance |
| Timeline |
| Chung Fu Tex |
| Giant Manufacturing |
Chung Fu and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Giant Manufacturing
The main advantage of trading using opposite Chung Fu and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing's long position.| Chung Fu vs. Chainqui Construction Development | Chung Fu vs. Zinwell | Chung Fu vs. Symtek Automation Asia | Chung Fu vs. CTCI Corp |
| Giant Manufacturing vs. Taiwan Semiconductor Manufacturing | Giant Manufacturing vs. Hon Hai Precision | Giant Manufacturing vs. MediaTek | Giant Manufacturing 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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