Correlation Between Chung Hsin and Andes Technology
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Andes Technology 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 Andes Technology 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 Andes Technology Corp, you can compare the effects of market volatilities on Chung Hsin and Andes Technology 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 Andes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Andes Technology.
Diversification Opportunities for Chung Hsin and Andes Technology
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chung and Andes is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Andes Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andes Technology 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 Andes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andes Technology Corp has no effect on the direction of Chung Hsin i.e., Chung Hsin and Andes Technology go up and down completely randomly.
Pair Corralation between Chung Hsin and Andes Technology
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.08 times more return on investment than Andes Technology. However, Chung Hsin is 1.08 times more volatile than Andes Technology Corp. It trades about 0.06 of its potential returns per unit of risk. Andes Technology Corp is currently generating about -0.01 per unit of risk. If you would invest 11,050 in Chung Hsin Electric Machinery on August 29, 2024 and sell it today you would earn a total of 5,050 from holding Chung Hsin Electric Machinery or generate 45.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Andes Technology Corp
Performance |
| Timeline |
| Chung Hsin Electric |
| Andes Technology Corp |
Chung Hsin and Andes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Andes Technology
The main advantage of trading using opposite Chung Hsin and Andes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Andes Technology 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 Andes Technology will offset losses from the drop in Andes Technology's long position.| Chung Hsin vs. Yulon Motor Co | Chung Hsin vs. Far Eastern Department | Chung Hsin vs. China Steel Corp | Chung Hsin vs. Chang Hwa Commercial |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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