Correlation Between Chung Hwa and YFY
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and YFY 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 YFY 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 YFY Inc, you can compare the effects of market volatilities on Chung Hwa and YFY 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 YFY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and YFY.
Diversification Opportunities for Chung Hwa and YFY
Poor diversification
The 3 months correlation between Chung and YFY is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Pulp and YFY Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YFY Inc 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 YFY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YFY Inc has no effect on the direction of Chung Hwa i.e., Chung Hwa and YFY go up and down completely randomly.
Pair Corralation between Chung Hwa and YFY
Assuming the 90 days trading horizon Chung Hwa Pulp is expected to under-perform the YFY. In addition to that, Chung Hwa is 1.23 times more volatile than YFY Inc. It trades about -0.03 of its total potential returns per unit of risk. YFY Inc is currently generating about 0.0 per unit of volatility. If you would invest 3,155 in YFY Inc on September 4, 2024 and sell it today you would lose (115.00) from holding YFY Inc or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Pulp vs. YFY Inc
Performance |
| Timeline |
| Chung Hwa Pulp |
| YFY Inc |
Chung Hwa and YFY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and YFY
The main advantage of trading using opposite Chung Hwa and YFY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, YFY 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 YFY will offset losses from the drop in YFY's long position.The idea behind Chung Hwa Pulp and YFY Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |