Correlation Between Chung Hsin and Sheng Yu
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Sheng Yu 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 Sheng Yu 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 Sheng Yu Steel, you can compare the effects of market volatilities on Chung Hsin and Sheng Yu 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 Sheng Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Sheng Yu.
Diversification Opportunities for Chung Hsin and Sheng Yu
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Sheng is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Sheng Yu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sheng Yu 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 Sheng Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sheng Yu Steel has no effect on the direction of Chung Hsin i.e., Chung Hsin and Sheng Yu go up and down completely randomly.
Pair Corralation between Chung Hsin and Sheng Yu
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 2.32 times more return on investment than Sheng Yu. However, Chung Hsin is 2.32 times more volatile than Sheng Yu Steel. It trades about -0.02 of its potential returns per unit of risk. Sheng Yu Steel is currently generating about -0.11 per unit of risk. If you would invest 15,800 in Chung Hsin Electric Machinery on October 30, 2024 and sell it today you would lose (300.00) from holding Chung Hsin Electric Machinery or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Sheng Yu Steel
Performance |
| Timeline |
| Chung Hsin Electric |
| Sheng Yu Steel |
Chung Hsin and Sheng Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Sheng Yu
The main advantage of trading using opposite Chung Hsin and Sheng Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Sheng Yu 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 Sheng Yu will offset losses from the drop in Sheng Yu's long position.| Chung Hsin vs. Chang Type Industrial | Chung Hsin vs. Anderson Industrial Corp | Chung Hsin vs. Klingon Aerospace | Chung Hsin vs. Basso Industry Corp |
| Sheng Yu vs. Yieh Phui Enterprise | Sheng Yu vs. Tung Ho Steel | Sheng Yu vs. Feng Hsin Steel | Sheng Yu vs. Chung Hung Steel |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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