Correlation Between Allis Electric and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Allis Electric and Chung Hsin 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 Allis Electric and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allis Electric Co and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Allis Electric and Chung Hsin 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 Allis Electric with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allis Electric and Chung Hsin.
Diversification Opportunities for Allis Electric and Chung Hsin
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allis and Chung is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Allis Electric Co and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric and Allis Electric 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 Allis Electric Co are associated (or correlated) with Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Allis Electric i.e., Allis Electric and Chung Hsin go up and down completely randomly.
Pair Corralation between Allis Electric and Chung Hsin
Assuming the 90 days trading horizon Allis Electric Co is expected to under-perform the Chung Hsin. In addition to that, Allis Electric is 1.23 times more volatile than Chung Hsin Electric Machinery. It trades about -0.04 of its total potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about -0.01 per unit of volatility. If you would invest 15,950 in Chung Hsin Electric Machinery on September 1, 2024 and sell it today you would lose (150.00) from holding Chung Hsin Electric Machinery or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allis Electric Co vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Allis Electric |
| Chung Hsin Electric |
Allis Electric and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allis Electric and Chung Hsin
The main advantage of trading using opposite Allis Electric and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allis Electric position performs unexpectedly, Chung Hsin 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 Chung Hsin will offset losses from the drop in Chung Hsin's long position.| Allis Electric vs. Chung Hsin Electric Machinery | Allis Electric vs. Fortune Electric Co | Allis Electric vs. TECO Electric Machinery | Allis Electric vs. Shihlin Electric Engineering |
| Chung Hsin vs. BES Engineering Co | Chung Hsin vs. Continental Holdings Corp | Chung Hsin vs. Kee Tai Properties | Chung Hsin vs. Hung Sheng Construction |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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