Correlation Between Tex Ray and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Tex Ray 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 Tex Ray and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tex Ray Industrial Co and Chi Hua Fitness, you can compare the effects of market volatilities on Tex Ray 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 Tex Ray with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Ray and Chi Hua.
Diversification Opportunities for Tex Ray and Chi Hua
Significant diversification
The 3 months correlation between Tex and Chi is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co 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 Tex Ray 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 Tex Ray Industrial Co 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 Tex Ray i.e., Tex Ray and Chi Hua go up and down completely randomly.
Pair Corralation between Tex Ray and Chi Hua
Assuming the 90 days trading horizon Tex Ray Industrial Co is expected to generate 0.73 times more return on investment than Chi Hua. However, Tex Ray Industrial Co is 1.38 times less risky than Chi Hua. It trades about -0.03 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.37 per unit of risk. If you would invest 1,045 in Tex Ray Industrial Co on October 12, 2024 and sell it today you would lose (5.00) from holding Tex Ray Industrial Co or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tex Ray Industrial Co vs. Chi Hua Fitness
Performance |
| Timeline |
| Tex Ray Industrial |
| Chi Hua Fitness |
Tex Ray and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tex Ray and Chi Hua
The main advantage of trading using opposite Tex Ray and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Ray 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.| Tex Ray vs. Tainan Enterprises Co | Tex Ray vs. De Licacy Industrial | Tex Ray vs. Nien Hsing Textile | Tex Ray vs. Wisher Industrial Co |
| Chi Hua vs. Jentech Precision Industrial | Chi Hua vs. Yi Jinn Industrial | Chi Hua vs. Tex Ray Industrial Co | Chi Hua vs. Fu Burg 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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