Correlation Between Yi Jinn and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Yi Jinn and Chi Hua 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 Yi Jinn and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yi Jinn Industrial and Chi Hua Fitness, you can compare the effects of market volatilities on Yi Jinn and Chi Hua 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 Yi Jinn with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yi Jinn and Chi Hua.
Diversification Opportunities for Yi Jinn and Chi Hua
Good diversification
The 3 months correlation between 1457 and Chi is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Yi Jinn Industrial and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Yi Jinn 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 Yi Jinn Industrial are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Yi Jinn i.e., Yi Jinn and Chi Hua go up and down completely randomly.
Pair Corralation between Yi Jinn and Chi Hua
Assuming the 90 days trading horizon Yi Jinn is expected to generate 28.4 times less return on investment than Chi Hua. But when comparing it to its historical volatility, Yi Jinn Industrial is 13.82 times less risky than Chi Hua. It trades about 0.01 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,279 in Chi Hua Fitness on October 27, 2024 and sell it today you would lose (2,794) from holding Chi Hua Fitness or give up 44.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yi Jinn Industrial vs. Chi Hua Fitness
Performance |
| Timeline |
| Yi Jinn Industrial |
| Chi Hua Fitness |
Yi Jinn and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yi Jinn and Chi Hua
The main advantage of trading using opposite Yi Jinn and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yi Jinn position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Yi Jinn vs. Zig Sheng Industrial | Yi Jinn vs. Lealea Enterprise Co | Yi Jinn vs. Shinkong Synthetic Fiber | Yi Jinn vs. Li Peng Enterprise |
| Chi Hua vs. Shan Loong Transportation Co | Chi Hua vs. Winstek Semiconductor Co | Chi Hua vs. Niko Semiconductor Co | Chi Hua vs. Sports Gear 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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