Correlation Between Chung Hsin and Qualipoly Chemical
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Qualipoly Chemical 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 Qualipoly Chemical 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 Qualipoly Chemical Corp, you can compare the effects of market volatilities on Chung Hsin and Qualipoly Chemical 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 Qualipoly Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Qualipoly Chemical.
Diversification Opportunities for Chung Hsin and Qualipoly Chemical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Qualipoly is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Qualipoly Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualipoly Chemical Corp 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 Qualipoly Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualipoly Chemical Corp has no effect on the direction of Chung Hsin i.e., Chung Hsin and Qualipoly Chemical go up and down completely randomly.
Pair Corralation between Chung Hsin and Qualipoly Chemical
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.97 times more return on investment than Qualipoly Chemical. However, Chung Hsin is 1.97 times more volatile than Qualipoly Chemical Corp. It trades about 0.08 of its potential returns per unit of risk. Qualipoly Chemical Corp is currently generating about 0.04 per unit of risk. If you would invest 6,400 in Chung Hsin Electric Machinery on September 2, 2024 and sell it today you would earn a total of 9,400 from holding Chung Hsin Electric Machinery or generate 146.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Qualipoly Chemical Corp
Performance |
| Timeline |
| Chung Hsin Electric |
| Qualipoly Chemical Corp |
Chung Hsin and Qualipoly Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Qualipoly Chemical
The main advantage of trading using opposite Chung Hsin and Qualipoly Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Qualipoly Chemical 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 Qualipoly Chemical will offset losses from the drop in Qualipoly Chemical'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 |
| Qualipoly Chemical vs. Basso Industry Corp | Qualipoly Chemical vs. Chung Hsin Electric Machinery | Qualipoly Chemical vs. TYC Brother Industrial | Qualipoly Chemical vs. TECO Electric Machinery |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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