Correlation Between Chung Hung and Chung Fu
Can any of the company-specific risk be diversified away by investing in both Chung Hung and Chung Fu 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 Hung and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hung Steel and Chung Fu Tex International, you can compare the effects of market volatilities on Chung Hung and Chung Fu 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 Hung with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Chung Fu.
Diversification Opportunities for Chung Hung and Chung Fu
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chung and Chung is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex and Chung Hung 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 Hung Steel are associated (or correlated) with Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of Chung Hung i.e., Chung Hung and Chung Fu go up and down completely randomly.
Pair Corralation between Chung Hung and Chung Fu
Assuming the 90 days trading horizon Chung Hung Steel is expected to generate 0.96 times more return on investment than Chung Fu. However, Chung Hung Steel is 1.04 times less risky than Chung Fu. It trades about -0.11 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about -0.23 per unit of risk. If you would invest 2,090 in Chung Hung Steel on September 2, 2024 and sell it today you would lose (120.00) from holding Chung Hung Steel or give up 5.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hung Steel vs. Chung Fu Tex International
Performance |
| Timeline |
| Chung Hung Steel |
| Chung Fu Tex |
Chung Hung and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hung and Chung Fu
The main advantage of trading using opposite Chung Hung and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Chung Fu 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 Fu will offset losses from the drop in Chung Fu's long position.| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
| Chung Fu vs. Ablerex Electronics Co | Chung Fu vs. AVerMedia Technologies | Chung Fu vs. C Media Electronics | Chung Fu vs. Universal Microelectronics 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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