Correlation Between Chi Hua and Century Wind
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Century Wind 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 Century Wind 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 Century Wind Power, you can compare the effects of market volatilities on Chi Hua and Century Wind 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 Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Century Wind.
Diversification Opportunities for Chi Hua and Century Wind
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chi and Century is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power 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 Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of Chi Hua i.e., Chi Hua and Century Wind go up and down completely randomly.
Pair Corralation between Chi Hua and Century Wind
Assuming the 90 days trading horizon Chi Hua Fitness is expected to generate 0.38 times more return on investment than Century Wind. However, Chi Hua Fitness is 2.62 times less risky than Century Wind. It trades about -0.39 of its potential returns per unit of risk. Century Wind Power is currently generating about -0.54 per unit of risk. If you would invest 3,790 in Chi Hua Fitness on October 16, 2024 and sell it today you would lose (240.00) from holding Chi Hua Fitness or give up 6.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Hua Fitness vs. Century Wind Power
Performance |
| Timeline |
| Chi Hua Fitness |
| Century Wind Power |
Chi Hua and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Century Wind
The main advantage of trading using opposite Chi Hua and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind's long position.| Chi Hua vs. Kuo Yang Construction | Chi Hua vs. Shan Loong Transportation Co | Chi Hua vs. Sports Gear Co | Chi Hua vs. Ruentex Engineering Construction |
| Century Wind vs. Te Chang Construction | Century Wind vs. RiTdisplay Corp | Century Wind vs. TECO Electric Machinery | Century Wind vs. Ruentex Engineering 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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