Correlation Between Chung Hung and Handa Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Chung Hung and Handa Pharmaceuticals 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 Handa Pharmaceuticals 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 Handa Pharmaceuticals, you can compare the effects of market volatilities on Chung Hung and Handa Pharmaceuticals 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 Handa Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Handa Pharmaceuticals.

Diversification Opportunities for Chung Hung and Handa Pharmaceuticals

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Chung and Handa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Handa Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handa Pharmaceuticals 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 Handa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handa Pharmaceuticals has no effect on the direction of Chung Hung i.e., Chung Hung and Handa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Chung Hung and Handa Pharmaceuticals

Assuming the 90 days trading horizon Chung Hung Steel is expected to generate 0.69 times more return on investment than Handa Pharmaceuticals. However, Chung Hung Steel is 1.46 times less risky than Handa Pharmaceuticals. It trades about -0.04 of its potential returns per unit of risk. Handa Pharmaceuticals is currently generating about -0.16 per unit of risk. If you would invest  2,255  in Chung Hung Steel on September 1, 2024 and sell it today you would lose (285.00) from holding Chung Hung Steel or give up 12.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.22%
ValuesDaily Returns

Chung Hung Steel  vs.  Handa Pharmaceuticals

 Performance 
       Timeline  
Chung Hung Steel 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Chung Hung Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chung Hung is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Handa Pharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Handa Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chung Hung and Handa Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chung Hung and Handa Pharmaceuticals

The main advantage of trading using opposite Chung Hung and Handa Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Handa Pharmaceuticals 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 Handa Pharmaceuticals will offset losses from the drop in Handa Pharmaceuticals' long position.
The idea behind Chung Hung Steel and Handa Pharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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