Correlation Between Chung Hung and Chien Shing
Can any of the company-specific risk be diversified away by investing in both Chung Hung and Chien Shing 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 Chien Shing 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 Chien Shing Stainless, you can compare the effects of market volatilities on Chung Hung and Chien Shing 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 Chien Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Chien Shing.
Diversification Opportunities for Chung Hung and Chien Shing
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chung and Chien is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Chien Shing Stainless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Shing Stainless 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 Chien Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Shing Stainless has no effect on the direction of Chung Hung i.e., Chung Hung and Chien Shing go up and down completely randomly.
Pair Corralation between Chung Hung and Chien Shing
Assuming the 90 days trading horizon Chung Hung Steel is expected to under-perform the Chien Shing. In addition to that, Chung Hung is 1.5 times more volatile than Chien Shing Stainless. It trades about -0.07 of its total potential returns per unit of risk. Chien Shing Stainless is currently generating about 0.01 per unit of volatility. If you would invest 1,085 in Chien Shing Stainless on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Chien Shing Stainless or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hung Steel vs. Chien Shing Stainless
Performance |
| Timeline |
| Chung Hung Steel |
| Chien Shing Stainless |
Chung Hung and Chien Shing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hung and Chien Shing
The main advantage of trading using opposite Chung Hung and Chien Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Chien Shing 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 Chien Shing will offset losses from the drop in Chien Shing'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 |
| Chien Shing vs. Basso Industry Corp | Chien Shing vs. Chung Hsin Electric Machinery | Chien Shing vs. TYC Brother Industrial | Chien Shing vs. TECO Electric Machinery |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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