Correlation Between Chung Hsin and Medigen Biotechnology
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Medigen Biotechnology 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 Medigen Biotechnology 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 Medigen Biotechnology, you can compare the effects of market volatilities on Chung Hsin and Medigen Biotechnology 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 Medigen Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Medigen Biotechnology.
Diversification Opportunities for Chung Hsin and Medigen Biotechnology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Medigen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Medigen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigen Biotechnology 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 Medigen Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigen Biotechnology has no effect on the direction of Chung Hsin i.e., Chung Hsin and Medigen Biotechnology go up and down completely randomly.
Pair Corralation between Chung Hsin and Medigen Biotechnology
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.39 times more return on investment than Medigen Biotechnology. However, Chung Hsin is 1.39 times more volatile than Medigen Biotechnology. It trades about -0.01 of its potential returns per unit of risk. Medigen Biotechnology is currently generating about -0.13 per unit of risk. If you would invest 15,950 in Chung Hsin Electric Machinery on September 1, 2024 and sell it today you would lose (150.00) from holding Chung Hsin Electric Machinery or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Medigen Biotechnology
Performance |
| Timeline |
| Chung Hsin Electric |
| Medigen Biotechnology |
Chung Hsin and Medigen Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Medigen Biotechnology
The main advantage of trading using opposite Chung Hsin and Medigen Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Medigen Biotechnology 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 Medigen Biotechnology will offset losses from the drop in Medigen Biotechnology'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 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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