Correlation Between Eternal Materials and Chialin Precision
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Chialin Precision 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 Eternal Materials and Chialin Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Chialin Precision Industrial, you can compare the effects of market volatilities on Eternal Materials and Chialin Precision 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 Eternal Materials with a short position of Chialin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Chialin Precision.
Diversification Opportunities for Eternal Materials and Chialin Precision
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eternal and Chialin is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Chialin Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chialin Precision and Eternal Materials 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 Eternal Materials Co are associated (or correlated) with Chialin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chialin Precision has no effect on the direction of Eternal Materials i.e., Eternal Materials and Chialin Precision go up and down completely randomly.
Pair Corralation between Eternal Materials and Chialin Precision
Assuming the 90 days trading horizon Eternal Materials Co is expected to under-perform the Chialin Precision. But the stock apears to be less risky and, when comparing its historical volatility, Eternal Materials Co is 1.43 times less risky than Chialin Precision. The stock trades about -0.01 of its potential returns per unit of risk. The Chialin Precision Industrial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,673 in Chialin Precision Industrial on November 19, 2024 and sell it today you would earn a total of 3,367 from holding Chialin Precision Industrial or generate 59.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternal Materials Co vs. Chialin Precision Industrial
Performance |
| Timeline |
| Eternal Materials |
| Chialin Precision |
Eternal Materials and Chialin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Chialin Precision
The main advantage of trading using opposite Eternal Materials and Chialin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Chialin Precision 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 Chialin Precision will offset losses from the drop in Chialin Precision's long position.| Eternal Materials vs. Taiwan Fertilizer Co | Eternal Materials vs. Nan Ya Plastics | Eternal Materials vs. Formosa Chemicals Fibre | Eternal Materials vs. Far Eastern New |
| Chialin Precision vs. CHINA DEVELOPMENT FINANCIAL | Chialin Precision vs. CTBC Financial Holding | Chialin Precision vs. Feng Ching Metal | Chialin Precision vs. Chernan Metal Industrial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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