Correlation Between Chung Hsin and Unitech Computer
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Unitech Computer 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 Unitech Computer 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 Unitech Computer Co, you can compare the effects of market volatilities on Chung Hsin and Unitech Computer 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 Unitech Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Unitech Computer.
Diversification Opportunities for Chung Hsin and Unitech Computer
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and Unitech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Unitech Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Computer 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 Unitech Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Computer has no effect on the direction of Chung Hsin i.e., Chung Hsin and Unitech Computer go up and down completely randomly.
Pair Corralation between Chung Hsin and Unitech Computer
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to under-perform the Unitech Computer. In addition to that, Chung Hsin is 2.19 times more volatile than Unitech Computer Co. It trades about -0.06 of its total potential returns per unit of risk. Unitech Computer Co is currently generating about -0.04 per unit of volatility. If you would invest 3,630 in Unitech Computer Co on November 4, 2024 and sell it today you would lose (20.00) from holding Unitech Computer Co or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Unitech Computer Co
Performance |
| Timeline |
| Chung Hsin Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Unitech Computer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chung Hsin and Unitech Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Unitech Computer
The main advantage of trading using opposite Chung Hsin and Unitech Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Unitech Computer 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 Unitech Computer will offset losses from the drop in Unitech Computer's long position.The idea behind Chung Hsin Electric Machinery and Unitech Computer Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 CEOs Directory module to screen CEOs from public companies around the world.
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