Correlation Between Basso Industry and Chiu Ting
Can any of the company-specific risk be diversified away by investing in both Basso Industry and Chiu Ting 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 Basso Industry and Chiu Ting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basso Industry Corp and Chiu Ting Machinery, you can compare the effects of market volatilities on Basso Industry and Chiu Ting 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 Basso Industry with a short position of Chiu Ting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basso Industry and Chiu Ting.
Diversification Opportunities for Basso Industry and Chiu Ting
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Basso and Chiu is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Basso Industry Corp and Chiu Ting Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiu Ting Machinery and Basso Industry 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 Basso Industry Corp are associated (or correlated) with Chiu Ting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiu Ting Machinery has no effect on the direction of Basso Industry i.e., Basso Industry and Chiu Ting go up and down completely randomly.
Pair Corralation between Basso Industry and Chiu Ting
Assuming the 90 days trading horizon Basso Industry Corp is expected to generate 0.52 times more return on investment than Chiu Ting. However, Basso Industry Corp is 1.92 times less risky than Chiu Ting. It trades about 0.01 of its potential returns per unit of risk. Chiu Ting Machinery is currently generating about -0.01 per unit of risk. If you would invest 4,160 in Basso Industry Corp on September 4, 2024 and sell it today you would earn a total of 135.00 from holding Basso Industry Corp or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basso Industry Corp vs. Chiu Ting Machinery
Performance |
| Timeline |
| Basso Industry Corp |
| Chiu Ting Machinery |
Basso Industry and Chiu Ting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basso Industry and Chiu Ting
The main advantage of trading using opposite Basso Industry and Chiu Ting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basso Industry position performs unexpectedly, Chiu Ting 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 Chiu Ting will offset losses from the drop in Chiu Ting's long position.| Basso Industry vs. Cheng Shin Rubber | Basso Industry vs. Kung Long Batteries | Basso Industry vs. Pou Chen Corp | Basso Industry vs. China Steel Chemical |
| Chiu Ting vs. Chang Type Industrial | Chiu Ting vs. Anderson Industrial Corp | Chiu Ting vs. Klingon Aerospace | Chiu Ting vs. Basso Industry 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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