Correlation Between Chung Hwa and Tainan Spinning
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Tainan Spinning 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 Chung Hwa and Tainan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hwa Chemical and Tainan Spinning Co, you can compare the effects of market volatilities on Chung Hwa and Tainan Spinning 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 Chung Hwa with a short position of Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Tainan Spinning.
Diversification Opportunities for Chung Hwa and Tainan Spinning
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Tainan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Chemical and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning and Chung Hwa 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 Chung Hwa Chemical are associated (or correlated) with Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Chung Hwa i.e., Chung Hwa and Tainan Spinning go up and down completely randomly.
Pair Corralation between Chung Hwa and Tainan Spinning
Assuming the 90 days trading horizon Chung Hwa Chemical is expected to generate 2.16 times more return on investment than Tainan Spinning. However, Chung Hwa is 2.16 times more volatile than Tainan Spinning Co. It trades about 0.03 of its potential returns per unit of risk. Tainan Spinning Co is currently generating about -0.07 per unit of risk. If you would invest 2,945 in Chung Hwa Chemical on September 13, 2024 and sell it today you would earn a total of 115.00 from holding Chung Hwa Chemical or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Chemical vs. Tainan Spinning Co
Performance |
| Timeline |
| Chung Hwa Chemical |
| Tainan Spinning |
Chung Hwa and Tainan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Tainan Spinning
The main advantage of trading using opposite Chung Hwa and Tainan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Tainan Spinning 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 Tainan Spinning will offset losses from the drop in Tainan Spinning's long position.| Chung Hwa vs. Tainan Spinning Co | Chung Hwa vs. Lealea Enterprise Co | Chung Hwa vs. China Petrochemical Development | Chung Hwa vs. Ruentex Development Co |
| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |