Correlation Between Chung Hsin and Trade Van
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Trade Van 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 Trade Van 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 Trade Van Information Services, you can compare the effects of market volatilities on Chung Hsin and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Trade Van.
Diversification Opportunities for Chung Hsin and Trade Van
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chung and Trade is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Chung Hsin i.e., Chung Hsin and Trade Van go up and down completely randomly.
Pair Corralation between Chung Hsin and Trade Van
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to under-perform the Trade Van. In addition to that, Chung Hsin is 1.52 times more volatile than Trade Van Information Services. It trades about -0.07 of its total potential returns per unit of risk. Trade Van Information Services is currently generating about 0.3 per unit of volatility. If you would invest 8,840 in Trade Van Information Services on November 5, 2024 and sell it today you would earn a total of 420.00 from holding Trade Van Information Services or generate 4.75% 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. Trade Van Information Services
Performance |
| Timeline |
| Chung Hsin Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Trade Van Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Chung Hsin and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Trade Van
The main advantage of trading using opposite Chung Hsin and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van's long position.The idea behind Chung Hsin Electric Machinery and Trade Van Information Services 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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