Correlation Between Chunghwa Chemical and Icares Medicus
Can any of the company-specific risk be diversified away by investing in both Chunghwa Chemical and Icares Medicus 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 Icares Medicus 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 Icares Medicus, you can compare the effects of market volatilities on Chunghwa Chemical and Icares Medicus 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 Icares Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Chemical and Icares Medicus.
Diversification Opportunities for Chunghwa Chemical and Icares Medicus
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chunghwa and Icares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Chemical Synthesis and Icares Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icares Medicus 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 Icares Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icares Medicus has no effect on the direction of Chunghwa Chemical i.e., Chunghwa Chemical and Icares Medicus go up and down completely randomly.
Pair Corralation between Chunghwa Chemical and Icares Medicus
Assuming the 90 days trading horizon Chunghwa Chemical Synthesis is expected to under-perform the Icares Medicus. But the stock apears to be less risky and, when comparing its historical volatility, Chunghwa Chemical Synthesis is 1.46 times less risky than Icares Medicus. The stock trades about -0.05 of its potential returns per unit of risk. The Icares Medicus is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,607 in Icares Medicus on October 9, 2024 and sell it today you would earn a total of 493.00 from holding Icares Medicus or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Chemical Synthesis vs. Icares Medicus
Performance |
| Timeline |
| Chunghwa Chemical |
| Icares Medicus |
Chunghwa Chemical and Icares Medicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Chemical and Icares Medicus
The main advantage of trading using opposite Chunghwa Chemical and Icares Medicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Chemical position performs unexpectedly, Icares Medicus 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 Icares Medicus will offset losses from the drop in Icares Medicus' long position.| Chunghwa Chemical vs. Phytohealth Corp | Chunghwa Chemical vs. GenMont Biotech | Chunghwa Chemical vs. Hung Sheng Construction | Chunghwa Chemical vs. De Licacy Industrial |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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