Correlation Between Shiny Chemical and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Shiny Chemical and Chung Hsin 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 Shiny Chemical and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shiny Chemical Industrial and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Shiny Chemical and Chung Hsin 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 Shiny Chemical with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and Chung Hsin.
Diversification Opportunities for Shiny Chemical and Chung Hsin
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shiny and Chung is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric and Shiny 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 Shiny Chemical Industrial are associated (or correlated) with Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and Chung Hsin go up and down completely randomly.
Pair Corralation between Shiny Chemical and Chung Hsin
Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to generate 0.93 times more return on investment than Chung Hsin. However, Shiny Chemical Industrial is 1.07 times less risky than Chung Hsin. It trades about -0.03 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about -0.03 per unit of risk. If you would invest 16,850 in Shiny Chemical Industrial on September 3, 2024 and sell it today you would lose (250.00) from holding Shiny Chemical Industrial or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiny Chemical Industrial vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Shiny Chemical Industrial |
| Chung Hsin Electric |
Shiny Chemical and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiny Chemical and Chung Hsin
The main advantage of trading using opposite Shiny Chemical and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiny Chemical position performs unexpectedly, Chung Hsin 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 Chung Hsin will offset losses from the drop in Chung Hsin's long position.| Shiny Chemical vs. China Steel Chemical | Shiny Chemical vs. TTET Union Corp | Shiny Chemical vs. Eternal Materials Co | Shiny Chemical vs. Yung Chi Paint |
| Chung Hsin vs. Universal Microelectronics Co | Chung Hsin vs. AVerMedia Technologies | Chung Hsin vs. Symtek Automation Asia | Chung Hsin vs. WiseChip Semiconductor |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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