Correlation Between Chung Hsin and Taiwan Styrene
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Taiwan Styrene 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 Chung Hsin and Taiwan Styrene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hsin Electric Machinery and Taiwan Styrene Monomer, you can compare the effects of market volatilities on Chung Hsin and Taiwan Styrene 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 Chung Hsin with a short position of Taiwan Styrene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Taiwan Styrene.
Diversification Opportunities for Chung Hsin and Taiwan Styrene
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and Taiwan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Taiwan Styrene Monomer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Styrene Monomer and Chung Hsin 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 Chung Hsin Electric Machinery are associated (or correlated) with Taiwan Styrene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Styrene Monomer has no effect on the direction of Chung Hsin i.e., Chung Hsin and Taiwan Styrene go up and down completely randomly.
Pair Corralation between Chung Hsin and Taiwan Styrene
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.77 times more return on investment than Taiwan Styrene. However, Chung Hsin is 1.77 times more volatile than Taiwan Styrene Monomer. It trades about 0.05 of its potential returns per unit of risk. Taiwan Styrene Monomer is currently generating about -0.03 per unit of risk. If you would invest 9,690 in Chung Hsin Electric Machinery on November 29, 2024 and sell it today you would earn a total of 5,510 from holding Chung Hsin Electric Machinery or generate 56.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Taiwan Styrene Monomer
Performance |
| Timeline |
| Chung Hsin Electric |
| Taiwan Styrene Monomer |
Chung Hsin and Taiwan Styrene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Taiwan Styrene
The main advantage of trading using opposite Chung Hsin and Taiwan Styrene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Taiwan Styrene 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 Taiwan Styrene will offset losses from the drop in Taiwan Styrene's long position.| Chung Hsin vs. Chang Type Industrial | Chung Hsin vs. Anderson Industrial Corp | Chung Hsin vs. Klingon Aerospace | Chung Hsin vs. Basso Industry Corp |
| Taiwan Styrene vs. Grand Pacific Petrochemical | Taiwan Styrene vs. USI Corp | Taiwan Styrene vs. Asia Polymer Corp | Taiwan Styrene vs. China Petrochemical Development |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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