Correlation Between Chung Hung and Golden Biotechnology
Can any of the company-specific risk be diversified away by investing in both Chung Hung and Golden Biotechnology 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 Golden Biotechnology 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 Golden Biotechnology, you can compare the effects of market volatilities on Chung Hung and Golden Biotechnology 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 Golden Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Golden Biotechnology.
Diversification Opportunities for Chung Hung and Golden Biotechnology
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chung and Golden is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Golden Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Biotechnology 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 Golden Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Biotechnology has no effect on the direction of Chung Hung i.e., Chung Hung and Golden Biotechnology go up and down completely randomly.
Pair Corralation between Chung Hung and Golden Biotechnology
Assuming the 90 days trading horizon Chung Hung Steel is expected to generate 0.58 times more return on investment than Golden Biotechnology. However, Chung Hung Steel is 1.73 times less risky than Golden Biotechnology. It trades about -0.05 of its potential returns per unit of risk. Golden Biotechnology is currently generating about -0.06 per unit of risk. If you would invest 2,859 in Chung Hung Steel on October 16, 2024 and sell it today you would lose (1,184) from holding Chung Hung Steel or give up 41.41% 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. Golden Biotechnology
Performance |
| Timeline |
| Chung Hung Steel |
| Golden Biotechnology |
Chung Hung and Golden Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hung and Golden Biotechnology
The main advantage of trading using opposite Chung Hung and Golden Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Golden Biotechnology 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 Golden Biotechnology will offset losses from the drop in Golden Biotechnology'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 |
| Golden Biotechnology vs. Tang Eng Iron | Golden Biotechnology vs. Chung Hung Steel | Golden Biotechnology vs. Tradetool Auto Co | Golden Biotechnology vs. Sunny Friend Environmental |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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