Correlation Between Chung Hung and First Copper
Can any of the company-specific risk be diversified away by investing in both Chung Hung and First Copper 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 First Copper 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 First Copper Technology, you can compare the effects of market volatilities on Chung Hung and First Copper 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 First Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and First Copper.
Diversification Opportunities for Chung Hung and First Copper
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chung and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and First Copper Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Copper Technology 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 First Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Copper Technology has no effect on the direction of Chung Hung i.e., Chung Hung and First Copper go up and down completely randomly.
Pair Corralation between Chung Hung and First Copper
Assuming the 90 days trading horizon Chung Hung Steel is expected to under-perform the First Copper. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hung Steel is 1.41 times less risky than First Copper. The stock trades about -0.04 of its potential returns per unit of risk. The First Copper Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,150 in First Copper Technology on October 24, 2024 and sell it today you would earn a total of 540.00 from holding First Copper Technology or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hung Steel vs. First Copper Technology
Performance |
| Timeline |
| Chung Hung Steel |
| First Copper Technology |
Chung Hung and First Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hung and First Copper
The main advantage of trading using opposite Chung Hung and First Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, First Copper 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 First Copper will offset losses from the drop in First Copper'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 |
| First Copper vs. Chung Hung Steel | First Copper vs. Ta Chen Stainless | First Copper vs. Tung Ho Steel | First Copper vs. Yieh Phui Enterprise |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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