Correlation Between Maxigen Biotech and Chunghwa Chemical
Can any of the company-specific risk be diversified away by investing in both Maxigen Biotech and Chunghwa Chemical 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 Maxigen Biotech and Chunghwa Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maxigen Biotech and Chunghwa Chemical Synthesis, you can compare the effects of market volatilities on Maxigen Biotech and Chunghwa Chemical 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 Maxigen Biotech with a short position of Chunghwa Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxigen Biotech and Chunghwa Chemical.
Diversification Opportunities for Maxigen Biotech and Chunghwa Chemical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Maxigen and Chunghwa is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Maxigen Biotech and Chunghwa Chemical Synthesis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Chemical and Maxigen Biotech 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 Maxigen Biotech are associated (or correlated) with Chunghwa Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Chemical has no effect on the direction of Maxigen Biotech i.e., Maxigen Biotech and Chunghwa Chemical go up and down completely randomly.
Pair Corralation between Maxigen Biotech and Chunghwa Chemical
Assuming the 90 days trading horizon Maxigen Biotech is expected to generate 1.28 times more return on investment than Chunghwa Chemical. However, Maxigen Biotech is 1.28 times more volatile than Chunghwa Chemical Synthesis. It trades about -0.02 of its potential returns per unit of risk. Chunghwa Chemical Synthesis is currently generating about -0.13 per unit of risk. If you would invest 5,730 in Maxigen Biotech on September 2, 2024 and sell it today you would lose (1,270) from holding Maxigen Biotech or give up 22.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maxigen Biotech vs. Chunghwa Chemical Synthesis
Performance |
| Timeline |
| Maxigen Biotech |
| Chunghwa Chemical |
Maxigen Biotech and Chunghwa Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxigen Biotech and Chunghwa Chemical
The main advantage of trading using opposite Maxigen Biotech and Chunghwa Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxigen Biotech position performs unexpectedly, Chunghwa Chemical 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 Chunghwa Chemical will offset losses from the drop in Chunghwa Chemical's long position.| Maxigen Biotech vs. Phytohealth Corp | Maxigen Biotech vs. Orient Pharma Co | Maxigen Biotech vs. Yung Zip Chemical |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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