Correlation Between Chung Hwa and China Glaze
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and China Glaze 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 China Glaze into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hwa Pulp and China Glaze Co, you can compare the effects of market volatilities on Chung Hwa and China Glaze 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 China Glaze. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and China Glaze.
Diversification Opportunities for Chung Hwa and China Glaze
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and China is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Pulp and China Glaze Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Glaze 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 Pulp are associated (or correlated) with China Glaze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Glaze has no effect on the direction of Chung Hwa i.e., Chung Hwa and China Glaze go up and down completely randomly.
Pair Corralation between Chung Hwa and China Glaze
Assuming the 90 days trading horizon Chung Hwa Pulp is expected to under-perform the China Glaze. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hwa Pulp is 2.46 times less risky than China Glaze. The stock trades about -0.13 of its potential returns per unit of risk. The China Glaze Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,070 in China Glaze Co on September 1, 2024 and sell it today you would earn a total of 80.00 from holding China Glaze Co or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Pulp vs. China Glaze Co
Performance |
| Timeline |
| Chung Hwa Pulp |
| China Glaze |
Chung Hwa and China Glaze Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and China Glaze
The main advantage of trading using opposite Chung Hwa and China Glaze positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, China Glaze 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 China Glaze will offset losses from the drop in China Glaze's long position.| Chung Hwa vs. Basso Industry Corp | Chung Hwa vs. Chung Hsin Electric Machinery | Chung Hwa vs. TYC Brother Industrial | Chung Hwa vs. TECO Electric Machinery |
| China Glaze vs. Basso Industry Corp | China Glaze vs. Chung Hsin Electric Machinery | China Glaze vs. TYC Brother Industrial | China Glaze vs. TECO Electric Machinery |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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