Correlation Between Chih Lien and Chun Yu
Can any of the company-specific risk be diversified away by investing in both Chih Lien and Chun Yu 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 Chih Lien and Chun Yu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chih Lien Industrial and Chun Yu Works, you can compare the effects of market volatilities on Chih Lien and Chun Yu 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 Chih Lien with a short position of Chun Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chih Lien and Chun Yu.
Diversification Opportunities for Chih Lien and Chun Yu
Very weak diversification
The 3 months correlation between Chih and Chun is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chih Lien Industrial and Chun Yu Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chun Yu Works and Chih Lien 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 Chih Lien Industrial are associated (or correlated) with Chun Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chun Yu Works has no effect on the direction of Chih Lien i.e., Chih Lien and Chun Yu go up and down completely randomly.
Pair Corralation between Chih Lien and Chun Yu
Assuming the 90 days trading horizon Chih Lien is expected to generate 9.7 times less return on investment than Chun Yu. In addition to that, Chih Lien is 1.05 times more volatile than Chun Yu Works. It trades about 0.01 of its total potential returns per unit of risk. Chun Yu Works is currently generating about 0.09 per unit of volatility. If you would invest 2,580 in Chun Yu Works on August 31, 2024 and sell it today you would earn a total of 80.00 from holding Chun Yu Works or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chih Lien Industrial vs. Chun Yu Works
Performance |
| Timeline |
| Chih Lien Industrial |
| Chun Yu Works |
Chih Lien and Chun Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chih Lien and Chun Yu
The main advantage of trading using opposite Chih Lien and Chun Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chih Lien position performs unexpectedly, Chun Yu 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 Chun Yu will offset losses from the drop in Chun Yu's long position.| Chih Lien vs. Chung Hung Steel | Chih Lien vs. Quintain Steel Co | Chih Lien vs. Chun Yuan Steel | Chih Lien vs. Sheng Yu Steel |
| Chun Yu vs. BES Engineering Co | Chun Yu vs. Continental Holdings Corp | Chun Yu vs. Kee Tai Properties | Chun Yu vs. Hung Sheng Construction |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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