Correlation Between Chung Hung and Tang Eng
Can any of the company-specific risk be diversified away by investing in both Chung Hung and Tang Eng 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 Tang Eng 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 Tang Eng Iron, you can compare the effects of market volatilities on Chung Hung and Tang Eng 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 Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Tang Eng.
Diversification Opportunities for Chung Hung and Tang Eng
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Tang is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron 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 Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Chung Hung i.e., Chung Hung and Tang Eng go up and down completely randomly.
Pair Corralation between Chung Hung and Tang Eng
Assuming the 90 days trading horizon Chung Hung Steel is expected to under-perform the Tang Eng. In addition to that, Chung Hung is 2.35 times more volatile than Tang Eng Iron. It trades about -0.01 of its total potential returns per unit of risk. Tang Eng Iron is currently generating about 0.02 per unit of volatility. If you would invest 3,170 in Tang Eng Iron on August 30, 2024 and sell it today you would earn a total of 150.00 from holding Tang Eng Iron or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Chung Hung Steel vs. Tang Eng Iron
Performance |
| Timeline |
| Chung Hung Steel |
| Tang Eng Iron |
Chung Hung and Tang Eng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hung and Tang Eng
The main advantage of trading using opposite Chung Hung and Tang Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Tang Eng 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 Tang Eng will offset losses from the drop in Tang Eng'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 |
| Tang Eng vs. Goldsun Building Materials | Tang Eng vs. CKM Building Material | Tang Eng vs. Shih Kuen Plastics | Tang Eng vs. Taiwan Cooperative Financial |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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