Correlation Between Chun Yuan and Chung Hung
Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Chung Hung 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 Chun Yuan and Chung Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chun Yuan Steel and Chung Hung Steel, you can compare the effects of market volatilities on Chun Yuan and Chung Hung 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 Chun Yuan with a short position of Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Chung Hung.
Diversification Opportunities for Chun Yuan and Chung Hung
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chun and Chung is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel and Chun Yuan 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 Chun Yuan Steel are associated (or correlated) with Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of Chun Yuan i.e., Chun Yuan and Chung Hung go up and down completely randomly.
Pair Corralation between Chun Yuan and Chung Hung
Assuming the 90 days trading horizon Chun Yuan is expected to generate 2.32 times less return on investment than Chung Hung. But when comparing it to its historical volatility, Chun Yuan Steel is 1.62 times less risky than Chung Hung. It trades about 0.03 of its potential returns per unit of risk. Chung Hung Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,900 in Chung Hung Steel on August 31, 2024 and sell it today you would earn a total of 95.00 from holding Chung Hung Steel or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chun Yuan Steel vs. Chung Hung Steel
Performance |
| Timeline |
| Chun Yuan Steel |
| Chung Hung Steel |
Chun Yuan and Chung Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chun Yuan and Chung Hung
The main advantage of trading using opposite Chun Yuan and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, Chung Hung 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 Hung will offset losses from the drop in Chung Hung's long position.| Chun Yuan vs. Hsin Kuang Steel | Chun Yuan vs. Chung Hung Steel | Chun Yuan vs. Feng Hsin Steel | Chun Yuan vs. Tung Ho Steel |
| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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