Correlation Between Chung Hsin and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Sunny Friend 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 Sunny Friend 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 Sunny Friend Environmental, you can compare the effects of market volatilities on Chung Hsin and Sunny Friend 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 Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Sunny Friend.
Diversification Opportunities for Chung Hsin and Sunny Friend
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chung and Sunny is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ 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 Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Chung Hsin i.e., Chung Hsin and Sunny Friend go up and down completely randomly.
Pair Corralation between Chung Hsin and Sunny Friend
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.03 times more return on investment than Sunny Friend. However, Chung Hsin is 1.03 times more volatile than Sunny Friend Environmental. It trades about 0.03 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about -0.2 per unit of risk. If you would invest 16,000 in Chung Hsin Electric Machinery on August 25, 2024 and sell it today you would earn a total of 150.00 from holding Chung Hsin Electric Machinery or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Sunny Friend Environmental
Performance |
| Timeline |
| Chung Hsin Electric |
| Sunny Friend Environ |
Chung Hsin and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Sunny Friend
The main advantage of trading using opposite Chung Hsin and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Sunny Friend 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 Sunny Friend will offset losses from the drop in Sunny Friend's long position.| Chung Hsin vs. Sunny Friend Environmental | Chung Hsin vs. Taiwan Secom Co | Chung Hsin vs. TTET Union Corp | Chung Hsin vs. ECOVE Environment Corp |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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