Correlation Between Chung Hsin and Lee Chi
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Lee Chi 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 Lee Chi 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 Lee Chi Enterprises, you can compare the effects of market volatilities on Chung Hsin and Lee Chi 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 Lee Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Lee Chi.
Diversification Opportunities for Chung Hsin and Lee Chi
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and Lee is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Lee Chi Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Chi Enterprises 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 Lee Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Chi Enterprises has no effect on the direction of Chung Hsin i.e., Chung Hsin and Lee Chi go up and down completely randomly.
Pair Corralation between Chung Hsin and Lee Chi
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 2.31 times more return on investment than Lee Chi. However, Chung Hsin is 2.31 times more volatile than Lee Chi Enterprises. It trades about -0.04 of its potential returns per unit of risk. Lee Chi Enterprises is currently generating about -0.25 per unit of risk. If you would invest 16,050 in Chung Hsin Electric Machinery on September 4, 2024 and sell it today you would lose (300.00) from holding Chung Hsin Electric Machinery or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Lee Chi Enterprises
Performance |
| Timeline |
| Chung Hsin Electric |
| Lee Chi Enterprises |
Chung Hsin and Lee Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Lee Chi
The main advantage of trading using opposite Chung Hsin and Lee Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Lee Chi 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 Lee Chi will offset losses from the drop in Lee Chi's long position.| Chung Hsin vs. TECO Electric Machinery | Chung Hsin vs. Fortune Electric Co | Chung Hsin vs. Taiwan Cement Corp | Chung Hsin vs. Walsin Lihwa Corp |
| Lee Chi vs. Tainan Spinning Co | Lee Chi vs. Chia Her Industrial | Lee Chi vs. WiseChip Semiconductor | Lee Chi vs. Novatek Microelectronics Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |