Correlation Between Chunghwa Chemical and Abnova Taiwan
Can any of the company-specific risk be diversified away by investing in both Chunghwa Chemical and Abnova Taiwan 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 Chunghwa Chemical and Abnova Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Chemical Synthesis and Abnova Taiwan Corp, you can compare the effects of market volatilities on Chunghwa Chemical and Abnova Taiwan 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 Chunghwa Chemical with a short position of Abnova Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Chemical and Abnova Taiwan.
Diversification Opportunities for Chunghwa Chemical and Abnova Taiwan
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and Abnova is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Chemical Synthesis and Abnova Taiwan Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abnova Taiwan Corp and Chunghwa Chemical 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 Chunghwa Chemical Synthesis are associated (or correlated) with Abnova Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abnova Taiwan Corp has no effect on the direction of Chunghwa Chemical i.e., Chunghwa Chemical and Abnova Taiwan go up and down completely randomly.
Pair Corralation between Chunghwa Chemical and Abnova Taiwan
Assuming the 90 days trading horizon Chunghwa Chemical Synthesis is expected to under-perform the Abnova Taiwan. In addition to that, Chunghwa Chemical is 1.82 times more volatile than Abnova Taiwan Corp. It trades about -0.32 of its total potential returns per unit of risk. Abnova Taiwan Corp is currently generating about -0.12 per unit of volatility. If you would invest 2,925 in Abnova Taiwan Corp on September 1, 2024 and sell it today you would lose (65.00) from holding Abnova Taiwan Corp or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Chemical Synthesis vs. Abnova Taiwan Corp
Performance |
| Timeline |
| Chunghwa Chemical |
| Abnova Taiwan Corp |
Chunghwa Chemical and Abnova Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Chemical and Abnova Taiwan
The main advantage of trading using opposite Chunghwa Chemical and Abnova Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Chemical position performs unexpectedly, Abnova Taiwan 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 Abnova Taiwan will offset losses from the drop in Abnova Taiwan's long position.| Chunghwa Chemical vs. Taiwan Semiconductor Manufacturing | Chunghwa Chemical vs. Hon Hai Precision | Chunghwa Chemical vs. MediaTek | Chunghwa Chemical vs. Chunghwa Telecom Co |
| Abnova Taiwan vs. Sinphar Pharmaceutical Co | Abnova Taiwan vs. Wellell | Abnova Taiwan vs. Phytohealth Corp | Abnova Taiwan vs. YungShin Global Holding |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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