Correlation Between Chung Hsin and King Slide
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and King Slide 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 King Slide 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 King Slide Works, you can compare the effects of market volatilities on Chung Hsin and King Slide 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 King Slide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and King Slide.
Diversification Opportunities for Chung Hsin and King Slide
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chung and King is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and King Slide Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Slide Works 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 King Slide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Slide Works has no effect on the direction of Chung Hsin i.e., Chung Hsin and King Slide go up and down completely randomly.
Pair Corralation between Chung Hsin and King Slide
Assuming the 90 days trading horizon Chung Hsin is expected to generate 1.59 times less return on investment than King Slide. But when comparing it to its historical volatility, Chung Hsin Electric Machinery is 1.16 times less risky than King Slide. It trades about 0.07 of its potential returns per unit of risk. King Slide Works is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 39,000 in King Slide Works on August 31, 2024 and sell it today you would earn a total of 100,000 from holding King Slide Works or generate 256.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. King Slide Works
Performance |
| Timeline |
| Chung Hsin Electric |
| King Slide Works |
Chung Hsin and King Slide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and King Slide
The main advantage of trading using opposite Chung Hsin and King Slide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, King Slide 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 King Slide will offset losses from the drop in King Slide'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 |
| King Slide vs. Eclat Textile Co | King Slide vs. Advantech Co | King Slide vs. Chicony Electronics Co | King Slide vs. Merida Industry Co |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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