Correlation Between Chun Yuan and Arima Communications
Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Arima Communications 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 Arima Communications 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 Arima Communications Corp, you can compare the effects of market volatilities on Chun Yuan and Arima Communications 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 Arima Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Arima Communications.
Diversification Opportunities for Chun Yuan and Arima Communications
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chun and Arima is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Arima Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arima Communications Corp 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 Arima Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arima Communications Corp has no effect on the direction of Chun Yuan i.e., Chun Yuan and Arima Communications go up and down completely randomly.
Pair Corralation between Chun Yuan and Arima Communications
Assuming the 90 days trading horizon Chun Yuan is expected to generate 125.91 times less return on investment than Arima Communications. But when comparing it to its historical volatility, Chun Yuan Steel is 17.42 times less risky than Arima Communications. It trades about 0.01 of its potential returns per unit of risk. Arima Communications Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Arima Communications Corp on October 22, 2024 and sell it today you would earn a total of 1,425 from holding Arima Communications Corp or generate 356.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chun Yuan Steel vs. Arima Communications Corp
Performance |
| Timeline |
| Chun Yuan Steel |
| Arima Communications Corp |
Chun Yuan and Arima Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chun Yuan and Arima Communications
The main advantage of trading using opposite Chun Yuan and Arima Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, Arima Communications 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 Arima Communications will offset losses from the drop in Arima Communications' long position.| Chun Yuan vs. Hsin Kuang Steel | Chun Yuan vs. Chung Hung Steel | Chun Yuan vs. China Steel Structure | Chun Yuan vs. Feng Hsin Steel |
| Arima Communications vs. Silitech Technology Corp | Arima Communications vs. Merry Electronics Co | Arima Communications vs. Cheng Uei Precision | Arima Communications vs. Wistron NeWeb Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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