Correlation Between Chung Hsin and G Shank
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and G Shank 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 G Shank 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 G Shank Enterprise Co, you can compare the effects of market volatilities on Chung Hsin and G Shank 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 G Shank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and G Shank.
Diversification Opportunities for Chung Hsin and G Shank
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and 2476 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and G Shank Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Shank Enterprise 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 G Shank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Shank Enterprise has no effect on the direction of Chung Hsin i.e., Chung Hsin and G Shank go up and down completely randomly.
Pair Corralation between Chung Hsin and G Shank
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.17 times more return on investment than G Shank. However, Chung Hsin is 1.17 times more volatile than G Shank Enterprise Co. It trades about 0.05 of its potential returns per unit of risk. G Shank Enterprise Co is currently generating about 0.05 per unit of risk. If you would invest 12,650 in Chung Hsin Electric Machinery on September 2, 2024 and sell it today you would earn a total of 3,150 from holding Chung Hsin Electric Machinery or generate 24.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. G Shank Enterprise Co
Performance |
| Timeline |
| Chung Hsin Electric |
| G Shank Enterprise |
Chung Hsin and G Shank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and G Shank
The main advantage of trading using opposite Chung Hsin and G Shank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, G Shank 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 G Shank will offset losses from the drop in G Shank'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 |
| G Shank vs. BES Engineering Co | G Shank vs. Continental Holdings Corp | G Shank vs. Kee Tai Properties | G Shank vs. Hung Sheng Construction |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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