Correlation Between Chung Hsin and BenQ Materials
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and BenQ Materials 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 BenQ Materials 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 BenQ Materials Corp, you can compare the effects of market volatilities on Chung Hsin and BenQ Materials 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 BenQ Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and BenQ Materials.
Diversification Opportunities for Chung Hsin and BenQ Materials
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chung and BenQ is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and BenQ Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Materials 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 BenQ Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Materials Corp has no effect on the direction of Chung Hsin i.e., Chung Hsin and BenQ Materials go up and down completely randomly.
Pair Corralation between Chung Hsin and BenQ Materials
Assuming the 90 days trading horizon Chung Hsin is expected to generate 2.27 times less return on investment than BenQ Materials. In addition to that, Chung Hsin is 1.15 times more volatile than BenQ Materials Corp. It trades about 0.01 of its total potential returns per unit of risk. BenQ Materials Corp is currently generating about 0.02 per unit of volatility. If you would invest 3,220 in BenQ Materials Corp on September 5, 2024 and sell it today you would earn a total of 20.00 from holding BenQ Materials Corp or generate 0.62% 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. BenQ Materials Corp
Performance |
| Timeline |
| Chung Hsin Electric |
| BenQ Materials Corp |
Chung Hsin and BenQ Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and BenQ Materials
The main advantage of trading using opposite Chung Hsin and BenQ Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, BenQ Materials 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 BenQ Materials will offset losses from the drop in BenQ Materials' long position.| Chung Hsin vs. Universal Microelectronics Co | Chung Hsin vs. AVerMedia Technologies | Chung Hsin vs. Symtek Automation Asia | Chung Hsin vs. WiseChip Semiconductor |
| BenQ Materials vs. Taiwan Semiconductor Manufacturing | BenQ Materials vs. Yang Ming Marine | BenQ Materials vs. AU Optronics | BenQ Materials vs. Nan Ya Plastics |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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