Correlation Between Chi Hua and Shiny Chemical
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Shiny Chemical 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 Chi Hua and Shiny Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Hua Fitness and Shiny Chemical Industrial, you can compare the effects of market volatilities on Chi Hua and Shiny Chemical 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 Chi Hua with a short position of Shiny Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Shiny Chemical.
Diversification Opportunities for Chi Hua and Shiny Chemical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chi and Shiny is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Shiny Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiny Chemical Industrial and Chi Hua 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 Chi Hua Fitness are associated (or correlated) with Shiny Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiny Chemical Industrial has no effect on the direction of Chi Hua i.e., Chi Hua and Shiny Chemical go up and down completely randomly.
Pair Corralation between Chi Hua and Shiny Chemical
Assuming the 90 days trading horizon Chi Hua Fitness is expected to under-perform the Shiny Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Chi Hua Fitness is 1.1 times less risky than Shiny Chemical. The stock trades about -0.21 of its potential returns per unit of risk. The Shiny Chemical Industrial is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 17,800 in Shiny Chemical Industrial on August 30, 2024 and sell it today you would lose (1,400) from holding Shiny Chemical Industrial or give up 7.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Hua Fitness vs. Shiny Chemical Industrial
Performance |
| Timeline |
| Chi Hua Fitness |
| Shiny Chemical Industrial |
Chi Hua and Shiny Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Shiny Chemical
The main advantage of trading using opposite Chi Hua and Shiny Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Shiny Chemical 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 Shiny Chemical will offset losses from the drop in Shiny Chemical's long position.| Chi Hua vs. Feng Tay Enterprises | Chi Hua vs. Ruentex Materials Co | Chi Hua vs. Symtek Automation Asia | Chi Hua vs. CTCI Corp |
| Shiny Chemical vs. China Steel Chemical | Shiny Chemical vs. TTET Union Corp | Shiny Chemical vs. Eternal Materials Co | Shiny Chemical vs. Yung Chi Paint |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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