Correlation Between Chung Hsin and Kung Long
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Kung Long 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 Kung Long 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 Kung Long Batteries, you can compare the effects of market volatilities on Chung Hsin and Kung Long 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 Kung Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Kung Long.
Diversification Opportunities for Chung Hsin and Kung Long
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chung and Kung is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Kung Long Batteries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kung Long Batteries 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 Kung Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kung Long Batteries has no effect on the direction of Chung Hsin i.e., Chung Hsin and Kung Long go up and down completely randomly.
Pair Corralation between Chung Hsin and Kung Long
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to under-perform the Kung Long. In addition to that, Chung Hsin is 1.09 times more volatile than Kung Long Batteries. It trades about -0.03 of its total potential returns per unit of risk. Kung Long Batteries is currently generating about 0.19 per unit of volatility. If you would invest 14,750 in Kung Long Batteries on September 3, 2024 and sell it today you would earn a total of 1,050 from holding Kung Long Batteries or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Kung Long Batteries
Performance |
| Timeline |
| Chung Hsin Electric |
| Kung Long Batteries |
Chung Hsin and Kung Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Kung Long
The main advantage of trading using opposite Chung Hsin and Kung Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Kung Long 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 Kung Long will offset losses from the drop in Kung Long's long position.| Chung Hsin vs. Universal Microelectronics Co | Chung Hsin vs. AVerMedia Technologies | Chung Hsin vs. Symtek Automation Asia | Chung Hsin vs. WiseChip Semiconductor |
| Kung Long vs. Universal Microelectronics Co | Kung Long vs. AVerMedia Technologies | Kung Long vs. Symtek Automation Asia | Kung Long vs. WiseChip Semiconductor |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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