Correlation Between Chung Hsin and New Asia
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and New Asia 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 New Asia 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 New Asia Construction, you can compare the effects of market volatilities on Chung Hsin and New Asia 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 New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and New Asia.
Diversification Opportunities for Chung Hsin and New Asia
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chung and New is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction 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 New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of Chung Hsin i.e., Chung Hsin and New Asia go up and down completely randomly.
Pair Corralation between Chung Hsin and New Asia
Assuming the 90 days trading horizon Chung Hsin is expected to generate 1.63 times less return on investment than New Asia. But when comparing it to its historical volatility, Chung Hsin Electric Machinery is 1.02 times less risky than New Asia. It trades about 0.06 of its potential returns per unit of risk. New Asia Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 502.00 in New Asia Construction on October 25, 2024 and sell it today you would earn a total of 1,208 from holding New Asia Construction or generate 240.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. New Asia Construction
Performance |
| Timeline |
| Chung Hsin Electric |
| New Asia Construction |
Chung Hsin and New Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and New Asia
The main advantage of trading using opposite Chung Hsin and New Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, New Asia 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 New Asia will offset losses from the drop in New Asia's long position.| Chung Hsin vs. TECO Electric Machinery | Chung Hsin vs. Fortune Electric Co | Chung Hsin vs. Taiwan Cement Corp | Chung Hsin vs. Walsin Lihwa Corp |
| New Asia vs. BES Engineering Co | New Asia vs. Delpha Construction Co | New Asia vs. Cathay Real Estate | New Asia vs. Da Cin Construction 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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