Correlation Between Chung Hung and Taiwan Speciality
Can any of the company-specific risk be diversified away by investing in both Chung Hung and Taiwan Speciality 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 Taiwan Speciality 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 Taiwan Speciality Chemicals, you can compare the effects of market volatilities on Chung Hung and Taiwan Speciality 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 Taiwan Speciality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Taiwan Speciality.
Diversification Opportunities for Chung Hung and Taiwan Speciality
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chung and Taiwan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Taiwan Speciality Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Speciality 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 Taiwan Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Speciality has no effect on the direction of Chung Hung i.e., Chung Hung and Taiwan Speciality go up and down completely randomly.
Pair Corralation between Chung Hung and Taiwan Speciality
Assuming the 90 days trading horizon Chung Hung Steel is expected to generate 0.84 times more return on investment than Taiwan Speciality. However, Chung Hung Steel is 1.19 times less risky than Taiwan Speciality. It trades about 0.04 of its potential returns per unit of risk. Taiwan Speciality Chemicals is currently generating about 0.0 per unit of risk. If you would invest 1,900 in Chung Hung Steel on August 31, 2024 and sell it today you would earn a total of 95.00 from holding Chung Hung Steel or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hung Steel vs. Taiwan Speciality Chemicals
Performance |
| Timeline |
| Chung Hung Steel |
| Taiwan Speciality |
Chung Hung and Taiwan Speciality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hung and Taiwan Speciality
The main advantage of trading using opposite Chung Hung and Taiwan Speciality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Taiwan Speciality 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 Taiwan Speciality will offset losses from the drop in Taiwan Speciality'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 |
| Taiwan Speciality vs. Arbor Technology | Taiwan Speciality vs. Great Computer | Taiwan Speciality vs. Unitech Computer Co | Taiwan Speciality vs. Fubon Taiwan Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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