Correlation Between Chi Hua and Hsinjing Holding
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Hsinjing Holding 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 Hsinjing Holding 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 Hsinjing Holding Co, you can compare the effects of market volatilities on Chi Hua and Hsinjing Holding 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 Hsinjing Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Hsinjing Holding.
Diversification Opportunities for Chi Hua and Hsinjing Holding
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chi and Hsinjing is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Hsinjing Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsinjing Holding 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 Hsinjing Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsinjing Holding has no effect on the direction of Chi Hua i.e., Chi Hua and Hsinjing Holding go up and down completely randomly.
Pair Corralation between Chi Hua and Hsinjing Holding
Assuming the 90 days trading horizon Chi Hua Fitness is expected to generate 1.05 times more return on investment than Hsinjing Holding. However, Chi Hua is 1.05 times more volatile than Hsinjing Holding Co. It trades about -0.02 of its potential returns per unit of risk. Hsinjing Holding Co is currently generating about -0.06 per unit of risk. If you would invest 3,810 in Chi Hua Fitness on September 14, 2024 and sell it today you would lose (25.00) from holding Chi Hua Fitness or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Hua Fitness vs. Hsinjing Holding Co
Performance |
| Timeline |
| Chi Hua Fitness |
| Hsinjing Holding |
Chi Hua and Hsinjing Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Hsinjing Holding
The main advantage of trading using opposite Chi Hua and Hsinjing Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Hsinjing Holding 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 Hsinjing Holding will offset losses from the drop in Hsinjing Holding's long position.| Chi Hua vs. Feng Tay Enterprises | Chi Hua vs. Pou Chen Corp | Chi Hua vs. Taiwan Paiho | Chi Hua vs. Ruentex Development Co |
| Hsinjing Holding vs. Hannstar Display Corp | Hsinjing Holding vs. Chi Hua Fitness | Hsinjing Holding vs. Pacific Hospital Supply | Hsinjing Holding vs. CHC Healthcare Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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