Correlation Between Grape King and Chunghwa Chemical
Can any of the company-specific risk be diversified away by investing in both Grape King and Chunghwa Chemical 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 Grape King and Chunghwa Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grape King Bio and Chunghwa Chemical Synthesis, you can compare the effects of market volatilities on Grape King and Chunghwa Chemical 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 Grape King with a short position of Chunghwa Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grape King and Chunghwa Chemical.
Diversification Opportunities for Grape King and Chunghwa Chemical
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grape and Chunghwa is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Grape King Bio and Chunghwa Chemical Synthesis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Chemical and Grape King 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 Grape King Bio are associated (or correlated) with Chunghwa Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Chemical has no effect on the direction of Grape King i.e., Grape King and Chunghwa Chemical go up and down completely randomly.
Pair Corralation between Grape King and Chunghwa Chemical
Assuming the 90 days trading horizon Grape King is expected to generate 5.84 times less return on investment than Chunghwa Chemical. But when comparing it to its historical volatility, Grape King Bio is 1.25 times less risky than Chunghwa Chemical. It trades about 0.1 of its potential returns per unit of risk. Chunghwa Chemical Synthesis is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 3,330 in Chunghwa Chemical Synthesis on November 29, 2024 and sell it today you would earn a total of 280.00 from holding Chunghwa Chemical Synthesis or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grape King Bio vs. Chunghwa Chemical Synthesis
Performance |
| Timeline |
| Grape King Bio |
| Chunghwa Chemical |
Grape King and Chunghwa Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grape King and Chunghwa Chemical
The main advantage of trading using opposite Grape King and Chunghwa Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grape King position performs unexpectedly, Chunghwa Chemical 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 Chunghwa Chemical will offset losses from the drop in Chunghwa Chemical's long position.| Grape King vs. Standard Foods Corp | Grape King vs. Eclat Textile Co | Grape King vs. Feng Tay Enterprises | Grape King vs. China Steel Chemical |
| Chunghwa Chemical vs. Sinphar Pharmaceutical Co | Chunghwa Chemical vs. Abnova Taiwan Corp | Chunghwa Chemical vs. YungShin Global Holding | Chunghwa Chemical vs. Phytohealth 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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