Correlation Between Chung Hsin and Basso Industry
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Basso Industry 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 Basso Industry 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 Basso Industry Corp, you can compare the effects of market volatilities on Chung Hsin and Basso Industry 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 Basso Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Basso Industry.
Diversification Opportunities for Chung Hsin and Basso Industry
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and Basso is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Basso Industry Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basso Industry Corp 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 Basso Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basso Industry Corp has no effect on the direction of Chung Hsin i.e., Chung Hsin and Basso Industry go up and down completely randomly.
Pair Corralation between Chung Hsin and Basso Industry
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.77 times more return on investment than Basso Industry. However, Chung Hsin is 1.77 times more volatile than Basso Industry Corp. It trades about -0.04 of its potential returns per unit of risk. Basso Industry Corp is currently generating about -0.12 per unit of risk. If you would invest 16,500 in Chung Hsin Electric Machinery on August 24, 2024 and sell it today you would lose (350.00) from holding Chung Hsin Electric Machinery or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Basso Industry Corp
Performance |
| Timeline |
| Chung Hsin Electric |
| Basso Industry Corp |
Chung Hsin and Basso Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Basso Industry
The main advantage of trading using opposite Chung Hsin and Basso Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Basso Industry 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 Basso Industry will offset losses from the drop in Basso Industry's long position.| Chung Hsin vs. Sunny Friend Environmental | Chung Hsin vs. Taiwan Secom Co | Chung Hsin vs. TTET Union Corp | Chung Hsin vs. ECOVE Environment Corp |
| Basso Industry vs. Cheng Shin Rubber | Basso Industry vs. Kung Long Batteries | Basso Industry vs. Pou Chen Corp | Basso Industry vs. China Steel Chemical |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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