Correlation Between Chi Hua and Power Wind
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Power Wind 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 Power Wind 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 Power Wind Health, you can compare the effects of market volatilities on Chi Hua and Power Wind 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 Power Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Power Wind.
Diversification Opportunities for Chi Hua and Power Wind
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chi and Power is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Power Wind Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Wind Health 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 Power Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Wind Health has no effect on the direction of Chi Hua i.e., Chi Hua and Power Wind go up and down completely randomly.
Pair Corralation between Chi Hua and Power Wind
Assuming the 90 days trading horizon Chi Hua Fitness is expected to under-perform the Power Wind. But the stock apears to be less risky and, when comparing its historical volatility, Chi Hua Fitness is 1.16 times less risky than Power Wind. The stock trades about -0.06 of its potential returns per unit of risk. The Power Wind Health is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 11,735 in Power Wind Health on August 31, 2024 and sell it today you would lose (485.00) from holding Power Wind Health or give up 4.13% 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. Power Wind Health
Performance |
| Timeline |
| Chi Hua Fitness |
| Power Wind Health |
Chi Hua and Power Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Power Wind
The main advantage of trading using opposite Chi Hua and Power Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Power Wind 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 Power Wind will offset losses from the drop in Power Wind's long position.| Chi Hua vs. Giant Manufacturing Co | Chi Hua vs. Merida Industry Co | Chi Hua vs. Johnson Health Tech | Chi Hua vs. Sports Gear Co |
| Power Wind vs. Sunny Friend Environmental | Power Wind vs. Cleanaway Co | Power Wind vs. Charoen Pokphand Enterprise | Power Wind vs. TTET Union Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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