Correlation Between Chia Her and Action Electronics
Can any of the company-specific risk be diversified away by investing in both Chia Her and Action Electronics 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 Action Electronics 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 Action Electronics Co, you can compare the effects of market volatilities on Chia Her and Action Electronics 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 Action Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Action Electronics.
Diversification Opportunities for Chia Her and Action Electronics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chia and Action is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chia Her Industrial and Action Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Action Electronics 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 Action Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Action Electronics has no effect on the direction of Chia Her i.e., Chia Her and Action Electronics go up and down completely randomly.
Pair Corralation between Chia Her and Action Electronics
Assuming the 90 days trading horizon Chia Her Industrial is expected to under-perform the Action Electronics. In addition to that, Chia Her is 1.81 times more volatile than Action Electronics Co. It trades about -0.09 of its total potential returns per unit of risk. Action Electronics Co is currently generating about 0.07 per unit of volatility. If you would invest 1,925 in Action Electronics Co on September 13, 2024 and sell it today you would earn a total of 75.00 from holding Action Electronics Co or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chia Her Industrial vs. Action Electronics Co
Performance |
| Timeline |
| Chia Her Industrial |
| Action Electronics |
Chia Her and Action Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Her and Action Electronics
The main advantage of trading using opposite Chia Her and Action Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Her position performs unexpectedly, Action Electronics 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 Action Electronics will offset losses from the drop in Action Electronics' long position.| Chia Her vs. Carnival Industrial Corp | Chia Her vs. I Hwa Industrial Co | Chia Her vs. Hung Chou Fiber | Chia Her vs. Tung Ho Textile |
| Action Electronics vs. Amtran Technology Co | Action Electronics vs. Asia Optical Co | Action Electronics vs. Emerging Display Technologies | Action Electronics vs. Bright Led Electronics |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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