Correlation Between Chung Hwa and Tycoons Group
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Tycoons Group 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 Tycoons Group 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 Tycoons Group Enterprise, you can compare the effects of market volatilities on Chung Hwa and Tycoons Group 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 Tycoons Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Tycoons Group.
Diversification Opportunities for Chung Hwa and Tycoons Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Tycoons is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Pulp and Tycoons Group Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tycoons Group Enterprise 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 Tycoons Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tycoons Group Enterprise has no effect on the direction of Chung Hwa i.e., Chung Hwa and Tycoons Group go up and down completely randomly.
Pair Corralation between Chung Hwa and Tycoons Group
Assuming the 90 days trading horizon Chung Hwa Pulp is expected to generate 1.21 times more return on investment than Tycoons Group. However, Chung Hwa is 1.21 times more volatile than Tycoons Group Enterprise. It trades about -0.14 of its potential returns per unit of risk. Tycoons Group Enterprise is currently generating about -0.26 per unit of risk. If you would invest 1,850 in Chung Hwa Pulp on September 12, 2024 and sell it today you would lose (80.00) from holding Chung Hwa Pulp or give up 4.32% 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. Tycoons Group Enterprise
Performance |
| Timeline |
| Chung Hwa Pulp |
| Tycoons Group Enterprise |
Chung Hwa and Tycoons Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Tycoons Group
The main advantage of trading using opposite Chung Hwa and Tycoons Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Tycoons Group 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 Tycoons Group will offset losses from the drop in Tycoons Group's long position.| Chung Hwa vs. Tainan Spinning Co | Chung Hwa vs. Lealea Enterprise Co | Chung Hwa vs. China Petrochemical Development | Chung Hwa vs. Ruentex Development Co |
| Tycoons Group vs. Quintain Steel Co | Tycoons Group vs. Chung Hwa Pulp | Tycoons Group vs. China Man Made Fiber | Tycoons Group vs. Sunko Ink Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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