Correlation Between Lealea Enterprise and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Chung Hwa 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 Lealea Enterprise and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lealea Enterprise Co and Chung Hwa Chemical, you can compare the effects of market volatilities on Lealea Enterprise and Chung Hwa 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 Lealea Enterprise with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Chung Hwa.
Diversification Opportunities for Lealea Enterprise and Chung Hwa
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lealea and Chung is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Chung Hwa Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Chemical and Lealea Enterprise 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 Lealea Enterprise Co are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Chemical has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Chung Hwa go up and down completely randomly.
Pair Corralation between Lealea Enterprise and Chung Hwa
Assuming the 90 days trading horizon Lealea Enterprise Co is expected to under-perform the Chung Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Lealea Enterprise Co is 2.27 times less risky than Chung Hwa. The stock trades about -0.01 of its potential returns per unit of risk. The Chung Hwa Chemical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,523 in Chung Hwa Chemical on September 12, 2024 and sell it today you would earn a total of 737.00 from holding Chung Hwa Chemical or generate 29.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lealea Enterprise Co vs. Chung Hwa Chemical
Performance |
| Timeline |
| Lealea Enterprise |
| Chung Hwa Chemical |
Lealea Enterprise and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lealea Enterprise and Chung Hwa
The main advantage of trading using opposite Lealea Enterprise and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lealea Enterprise position performs unexpectedly, Chung Hwa 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 Chung Hwa will offset losses from the drop in Chung Hwa's long position.| Lealea Enterprise vs. Feng Tay Enterprises | Lealea Enterprise vs. Ruentex Development Co | Lealea Enterprise vs. WiseChip Semiconductor | Lealea Enterprise vs. Novatek Microelectronics Corp |
| Chung Hwa vs. Tainan Spinning Co | Chung Hwa vs. Lealea Enterprise Co | Chung Hwa vs. China Petrochemical Development | Chung Hwa vs. Ruentex Development 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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