Correlation Between Chung Hsin and ReaLy Development
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and ReaLy Development 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 ReaLy Development 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 ReaLy Development Construction, you can compare the effects of market volatilities on Chung Hsin and ReaLy Development 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 ReaLy Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and ReaLy Development.
Diversification Opportunities for Chung Hsin and ReaLy Development
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chung and ReaLy is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and ReaLy Development Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReaLy Development 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 ReaLy Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReaLy Development has no effect on the direction of Chung Hsin i.e., Chung Hsin and ReaLy Development go up and down completely randomly.
Pair Corralation between Chung Hsin and ReaLy Development
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.11 times more return on investment than ReaLy Development. However, Chung Hsin is 1.11 times more volatile than ReaLy Development Construction. It trades about -0.07 of its potential returns per unit of risk. ReaLy Development Construction is currently generating about -0.29 per unit of risk. If you would invest 15,800 in Chung Hsin Electric Machinery on November 5, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. ReaLy Development Construction
Performance |
| Timeline |
| Chung Hsin Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ReaLy Development |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Chung Hsin and ReaLy Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and ReaLy Development
The main advantage of trading using opposite Chung Hsin and ReaLy Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, ReaLy Development 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 ReaLy Development will offset losses from the drop in ReaLy Development's long position.The idea behind Chung Hsin Electric Machinery and ReaLy Development Construction 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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