Correlation Between Chung Fu and China Television
Can any of the company-specific risk be diversified away by investing in both Chung Fu and China Television 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 China Television 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 China Television Co, you can compare the effects of market volatilities on Chung Fu and China Television 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 China Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and China Television.
Diversification Opportunities for Chung Fu and China Television
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chung and China is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and China Television Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Television 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 China Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Television has no effect on the direction of Chung Fu i.e., Chung Fu and China Television go up and down completely randomly.
Pair Corralation between Chung Fu and China Television
Assuming the 90 days trading horizon Chung Fu Tex International is expected to generate 3.09 times more return on investment than China Television. However, Chung Fu is 3.09 times more volatile than China Television Co. It trades about 0.11 of its potential returns per unit of risk. China Television Co is currently generating about -0.36 per unit of risk. If you would invest 3,300 in Chung Fu Tex International on October 31, 2024 and sell it today you would earn a total of 200.00 from holding Chung Fu Tex International or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Fu Tex International vs. China Television Co
Performance |
| Timeline |
| Chung Fu Tex |
| China Television |
Chung Fu and China Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and China Television
The main advantage of trading using opposite Chung Fu and China Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, China Television 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 China Television will offset losses from the drop in China Television's long position.| Chung Fu vs. Fortune Information Systems | Chung Fu vs. AVer Information | Chung Fu vs. U Ming Marine Transport | Chung Fu vs. Adata Technology Co |
| China Television vs. Choice Development | China Television vs. Ton Yi Industrial | China Television vs. Taiwan Sakura Corp | China Television vs. Thye Ming Industrial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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