Correlation Between Chi Hua and Great Computer
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Great Computer 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 Great Computer 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 Great Computer, you can compare the effects of market volatilities on Chi Hua and Great Computer 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 Great Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Great Computer.
Diversification Opportunities for Chi Hua and Great Computer
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chi and Great is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer 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 Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Chi Hua i.e., Chi Hua and Great Computer go up and down completely randomly.
Pair Corralation between Chi Hua and Great Computer
Assuming the 90 days trading horizon Chi Hua Fitness is expected to under-perform the Great Computer. But the stock apears to be less risky and, when comparing its historical volatility, Chi Hua Fitness is 5.31 times less risky than Great Computer. The stock trades about -0.08 of its potential returns per unit of risk. The Great Computer is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,845 in Great Computer on September 1, 2024 and sell it today you would earn a total of 155.00 from holding Great Computer or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Hua Fitness vs. Great Computer
Performance |
| Timeline |
| Chi Hua Fitness |
| Great Computer |
Chi Hua and Great Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Great Computer
The main advantage of trading using opposite Chi Hua and Great Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Great Computer 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 Great Computer will offset losses from the drop in Great Computer'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 |
| Great Computer vs. Chi Hua Fitness | Great Computer vs. CHC Healthcare Group | Great Computer vs. First Hotel Co | Great Computer vs. SS Healthcare Holding |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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