Correlation Between Chia Her and Hotai
Can any of the company-specific risk be diversified away by investing in both Chia Her and Hotai 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 Chia Her and Hotai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Her Industrial and Hotai Motor Co, you can compare the effects of market volatilities on Chia Her and Hotai 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 Chia Her with a short position of Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Hotai.
Diversification Opportunities for Chia Her and Hotai
Very good diversification
The 3 months correlation between Chia and Hotai is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chia Her Industrial and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor and Chia Her 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 Chia Her Industrial are associated (or correlated) with Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of Chia Her i.e., Chia Her and Hotai go up and down completely randomly.
Pair Corralation between Chia Her and Hotai
Assuming the 90 days trading horizon Chia Her Industrial is expected to generate 2.12 times more return on investment than Hotai. However, Chia Her is 2.12 times more volatile than Hotai Motor Co. It trades about 0.02 of its potential returns per unit of risk. Hotai Motor Co is currently generating about -0.03 per unit of risk. If you would invest 2,280 in Chia Her Industrial on September 2, 2024 and sell it today you would earn a total of 95.00 from holding Chia Her Industrial or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chia Her Industrial vs. Hotai Motor Co
Performance |
| Timeline |
| Chia Her Industrial |
| Hotai Motor |
Chia Her and Hotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Her and Hotai
The main advantage of trading using opposite Chia Her and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Her position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai's long position.| Chia Her vs. Chaintech Technology Corp | Chia Her vs. Avision | Chia Her vs. Clevo Co | Chia Her vs. Elitegroup Computer Systems |
| Hotai vs. President Chain Store | Hotai vs. Formosa Petrochemical Corp | Hotai vs. Cheng Shin Rubber | Hotai vs. Formosa Chemicals Fibre |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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