Correlation Between Chi Hua and Sun Max
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Sun Max 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 Sun Max 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 Sun Max Tech, you can compare the effects of market volatilities on Chi Hua and Sun Max 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 Sun Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Sun Max.
Diversification Opportunities for Chi Hua and Sun Max
Very good diversification
The 3 months correlation between Chi and Sun is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Sun Max Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Max Tech 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 Sun Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Max Tech has no effect on the direction of Chi Hua i.e., Chi Hua and Sun Max go up and down completely randomly.
Pair Corralation between Chi Hua and Sun Max
Assuming the 90 days trading horizon Chi Hua Fitness is expected to under-perform the Sun Max. But the stock apears to be less risky and, when comparing its historical volatility, Chi Hua Fitness is 1.55 times less risky than Sun Max. The stock trades about -0.12 of its potential returns per unit of risk. The Sun Max Tech is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,996 in Sun Max Tech on August 29, 2024 and sell it today you would earn a total of 254.00 from holding Sun Max Tech or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Hua Fitness vs. Sun Max Tech
Performance |
| Timeline |
| Chi Hua Fitness |
| Sun Max Tech |
Chi Hua and Sun Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Sun Max
The main advantage of trading using opposite Chi Hua and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Sun Max 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 Sun Max will offset losses from the drop in Sun Max'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 |
| Sun Max vs. ASRock Inc | Sun Max vs. Ko Ja Cayman | Sun Max vs. Chenbro Micom Co | Sun Max vs. Leadtek Research |
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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