Correlation Between Chung Hsin and Sesoda Corp
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Sesoda Corp 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 Sesoda Corp 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 Sesoda Corp, you can compare the effects of market volatilities on Chung Hsin and Sesoda Corp 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 Sesoda Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Sesoda Corp.
Diversification Opportunities for Chung Hsin and Sesoda Corp
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chung and Sesoda is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Sesoda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sesoda 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 Sesoda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sesoda Corp has no effect on the direction of Chung Hsin i.e., Chung Hsin and Sesoda Corp go up and down completely randomly.
Pair Corralation between Chung Hsin and Sesoda Corp
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to under-perform the Sesoda Corp. In addition to that, Chung Hsin is 1.04 times more volatile than Sesoda Corp. It trades about -0.02 of its total potential returns per unit of risk. Sesoda Corp is currently generating about 0.09 per unit of volatility. If you would invest 3,990 in Sesoda Corp on August 31, 2024 and sell it today you would earn a total of 130.00 from holding Sesoda Corp or generate 3.26% 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. Sesoda Corp
Performance |
| Timeline |
| Chung Hsin Electric |
| Sesoda Corp |
Chung Hsin and Sesoda Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Sesoda Corp
The main advantage of trading using opposite Chung Hsin and Sesoda Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Sesoda Corp 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 Sesoda Corp will offset losses from the drop in Sesoda Corp's long position.| Chung Hsin vs. BES Engineering Co | Chung Hsin vs. Continental Holdings Corp | Chung Hsin vs. Kee Tai Properties | Chung Hsin vs. Hung Sheng Construction |
| Sesoda Corp vs. Basso Industry Corp | Sesoda Corp vs. Chung Hsin Electric Machinery | Sesoda Corp vs. TYC Brother Industrial | Sesoda Corp vs. TECO Electric Machinery |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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