Correlation Between Chung Hsin and Green World
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Green World 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 Green World 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 Green World Fintech, you can compare the effects of market volatilities on Chung Hsin and Green World 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 Green World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Green World.
Diversification Opportunities for Chung Hsin and Green World
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chung and Green is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Green World Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green World Fintech 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 Green World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green World Fintech has no effect on the direction of Chung Hsin i.e., Chung Hsin and Green World go up and down completely randomly.
Pair Corralation between Chung Hsin and Green World
Assuming the 90 days trading horizon Chung Hsin is expected to generate 2.59 times less return on investment than Green World. But when comparing it to its historical volatility, Chung Hsin Electric Machinery is 1.27 times less risky than Green World. It trades about 0.05 of its potential returns per unit of risk. Green World Fintech is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,047 in Green World Fintech on September 12, 2024 and sell it today you would earn a total of 3,823 from holding Green World Fintech or generate 125.47% 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. Green World Fintech
Performance |
| Timeline |
| Chung Hsin Electric |
| Green World Fintech |
Chung Hsin and Green World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Green World
The main advantage of trading using opposite Chung Hsin and Green World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Green World 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 Green World will offset losses from the drop in Green World's long position.| Chung Hsin vs. Yang Ming Marine | Chung Hsin vs. Wan Hai Lines | Chung Hsin vs. U Ming Marine Transport | Chung Hsin vs. Taiwan Navigation Co |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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