Correlation Between Chi Hua and Kunyue Development
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Kunyue Development 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 Kunyue Development 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 Kunyue Development Co, you can compare the effects of market volatilities on Chi Hua and Kunyue Development 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 Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Kunyue Development.
Diversification Opportunities for Chi Hua and Kunyue Development
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chi and Kunyue is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development 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 Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of Chi Hua i.e., Chi Hua and Kunyue Development go up and down completely randomly.
Pair Corralation between Chi Hua and Kunyue Development
Assuming the 90 days trading horizon Chi Hua Fitness is expected to under-perform the Kunyue Development. But the stock apears to be less risky and, when comparing its historical volatility, Chi Hua Fitness is 3.02 times less risky than Kunyue Development. The stock trades about -0.09 of its potential returns per unit of risk. The Kunyue Development Co is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,420 in Kunyue Development Co on August 30, 2024 and sell it today you would earn a total of 695.00 from holding Kunyue Development Co or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Hua Fitness vs. Kunyue Development Co
Performance |
| Timeline |
| Chi Hua Fitness |
| Kunyue Development |
Chi Hua and Kunyue Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Kunyue Development
The main advantage of trading using opposite Chi Hua and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Kunyue Development 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 Kunyue Development will offset losses from the drop in Kunyue Development'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 |
| Kunyue Development vs. U Media Communications | Kunyue Development vs. Tradetool Auto Co | Kunyue Development vs. RDC Semiconductor Co | Kunyue Development vs. Tai Tung Communication |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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