Correlation Between TYC Brother and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both TYC Brother 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 TYC Brother and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TYC Brother Industrial and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on TYC Brother 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 TYC Brother with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of TYC Brother and Chung Hsin.
Diversification Opportunities for TYC Brother and Chung Hsin
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TYC and Chung is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding TYC Brother Industrial 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 TYC Brother 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 TYC Brother Industrial 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 TYC Brother i.e., TYC Brother and Chung Hsin go up and down completely randomly.
Pair Corralation between TYC Brother and Chung Hsin
Assuming the 90 days trading horizon TYC Brother Industrial is expected to generate 0.8 times more return on investment than Chung Hsin. However, TYC Brother Industrial is 1.25 times less risky than Chung Hsin. It trades about 0.14 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about -0.04 per unit of risk. If you would invest 6,090 in TYC Brother Industrial on August 24, 2024 and sell it today you would earn a total of 300.00 from holding TYC Brother Industrial or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TYC Brother Industrial vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| TYC Brother Industrial |
| Chung Hsin Electric |
TYC Brother and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TYC Brother and Chung Hsin
The main advantage of trading using opposite TYC Brother and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TYC Brother 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.| TYC Brother vs. Taiwan Semiconductor Manufacturing | TYC Brother vs. Hon Hai Precision | TYC Brother vs. MediaTek | TYC Brother vs. Chunghwa Telecom Co |
| Chung Hsin vs. Sunny Friend Environmental | Chung Hsin vs. Taiwan Secom Co | Chung Hsin vs. TTET Union Corp | Chung Hsin vs. ECOVE Environment Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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