Correlation Between Chung Hwa and Joinsoon Electronics
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Joinsoon Electronics 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 Joinsoon Electronics 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 Joinsoon Electronics MFG, you can compare the effects of market volatilities on Chung Hwa and Joinsoon Electronics 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 Joinsoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Joinsoon Electronics.
Diversification Opportunities for Chung Hwa and Joinsoon Electronics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and Joinsoon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Chemical and Joinsoon Electronics MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joinsoon Electronics MFG 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 Joinsoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joinsoon Electronics MFG has no effect on the direction of Chung Hwa i.e., Chung Hwa and Joinsoon Electronics go up and down completely randomly.
Pair Corralation between Chung Hwa and Joinsoon Electronics
Assuming the 90 days trading horizon Chung Hwa Chemical is expected to under-perform the Joinsoon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hwa Chemical is 1.13 times less risky than Joinsoon Electronics. The stock trades about -0.35 of its potential returns per unit of risk. The Joinsoon Electronics MFG is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,850 in Joinsoon Electronics MFG on September 12, 2024 and sell it today you would lose (95.00) from holding Joinsoon Electronics MFG or give up 5.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Chemical vs. Joinsoon Electronics MFG
Performance |
| Timeline |
| Chung Hwa Chemical |
| Joinsoon Electronics MFG |
Chung Hwa and Joinsoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Joinsoon Electronics
The main advantage of trading using opposite Chung Hwa and Joinsoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Joinsoon Electronics 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 Joinsoon Electronics will offset losses from the drop in Joinsoon Electronics' 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 |
| Joinsoon Electronics vs. Chung Hwa Chemical | Joinsoon Electronics vs. WinMate Communication INC | Joinsoon Electronics vs. Acelon Chemicals Fiber | Joinsoon Electronics vs. Chief Telecom |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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