Correlation Between Chung Hsin and Great Computer
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Great Computer 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 Great Computer 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 Great Computer, you can compare the effects of market volatilities on Chung Hsin and Great Computer 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 Great Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Great Computer.
Diversification Opportunities for Chung Hsin and Great Computer
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chung and Great is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer 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 Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Chung Hsin i.e., Chung Hsin and Great Computer go up and down completely randomly.
Pair Corralation between Chung Hsin and Great Computer
Assuming the 90 days trading horizon Chung Hsin is expected to generate 8.83 times less return on investment than Great Computer. But when comparing it to its historical volatility, Chung Hsin Electric Machinery is 2.86 times less risky than Great Computer. It trades about 0.1 of its potential returns per unit of risk. Great Computer is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,590 in Great Computer on August 28, 2024 and sell it today you would earn a total of 615.00 from holding Great Computer or generate 38.68% 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. Great Computer
Performance |
| Timeline |
| Chung Hsin Electric |
| Great Computer |
Chung Hsin and Great Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Great Computer
The main advantage of trading using opposite Chung Hsin and Great Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Great Computer 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 Great Computer will offset losses from the drop in Great Computer's long position.| Chung Hsin vs. Sunny Friend Environmental | Chung Hsin vs. TTET Union Corp | Chung Hsin vs. ECOVE Environment Corp | Chung Hsin vs. Yulon Finance Corp |
| Great Computer vs. Airtac International Group | Great Computer vs. TECO Electric Machinery | Great Computer vs. Chung Hsin Electric Machinery | Great Computer vs. King Slide Works |
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 CEOs Directory module to screen CEOs from public companies around the world.
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