Correlation Between Chung Hsin and Feng Hsin
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Feng Hsin 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 Feng Hsin 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 Feng Hsin Steel, you can compare the effects of market volatilities on Chung Hsin and Feng Hsin 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 Feng Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Feng Hsin.
Diversification Opportunities for Chung Hsin and Feng Hsin
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chung and Feng is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Feng Hsin Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Hsin Steel 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 Feng Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Hsin Steel has no effect on the direction of Chung Hsin i.e., Chung Hsin and Feng Hsin go up and down completely randomly.
Pair Corralation between Chung Hsin and Feng Hsin
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 2.46 times more return on investment than Feng Hsin. However, Chung Hsin is 2.46 times more volatile than Feng Hsin Steel. It trades about 0.08 of its potential returns per unit of risk. Feng Hsin Steel is currently generating about 0.03 per unit of risk. If you would invest 6,400 in Chung Hsin Electric Machinery on September 2, 2024 and sell it today you would earn a total of 9,400 from holding Chung Hsin Electric Machinery or generate 146.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Feng Hsin Steel
Performance |
| Timeline |
| Chung Hsin Electric |
| Feng Hsin Steel |
Chung Hsin and Feng Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Feng Hsin
The main advantage of trading using opposite Chung Hsin and Feng Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Feng Hsin 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 Feng Hsin will offset losses from the drop in Feng Hsin'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 |
| Feng Hsin vs. Basso Industry Corp | Feng Hsin vs. Chung Hsin Electric Machinery | Feng Hsin vs. TYC Brother Industrial | Feng Hsin 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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