Correlation Between Chi Hua and Kinko Optical
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Kinko Optical 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 Kinko Optical 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 Kinko Optical Co, you can compare the effects of market volatilities on Chi Hua and Kinko Optical 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 Kinko Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Kinko Optical.
Diversification Opportunities for Chi Hua and Kinko Optical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chi and Kinko is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical 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 Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Chi Hua i.e., Chi Hua and Kinko Optical go up and down completely randomly.
Pair Corralation between Chi Hua and Kinko Optical
Assuming the 90 days trading horizon Chi Hua Fitness is expected to generate 0.76 times more return on investment than Kinko Optical. However, Chi Hua Fitness is 1.32 times less risky than Kinko Optical. It trades about -0.08 of its potential returns per unit of risk. Kinko Optical Co is currently generating about -0.08 per unit of risk. If you would invest 3,790 in Chi Hua Fitness on September 1, 2024 and sell it today you would lose (70.00) from holding Chi Hua Fitness or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chi Hua Fitness vs. Kinko Optical Co
Performance |
| Timeline |
| Chi Hua Fitness |
| Kinko Optical |
Chi Hua and Kinko Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Kinko Optical
The main advantage of trading using opposite Chi Hua and Kinko Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Kinko Optical 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 Kinko Optical will offset losses from the drop in Kinko Optical's long position.| Chi Hua vs. Giant Manufacturing Co | Chi Hua vs. Merida Industry Co | Chi Hua vs. Johnson Health Tech | Chi Hua vs. Power Wind Health |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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