Correlation Between Ta Chen and Chung Hung
Can any of the company-specific risk be diversified away by investing in both Ta Chen and Chung Hung 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 Ta Chen and Chung Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Chen Stainless and Chung Hung Steel, you can compare the effects of market volatilities on Ta Chen and Chung Hung 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 Ta Chen with a short position of Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Chen and Chung Hung.
Diversification Opportunities for Ta Chen and Chung Hung
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2027 and Chung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ta Chen Stainless and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel and Ta Chen 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 Ta Chen Stainless are associated (or correlated) with Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of Ta Chen i.e., Ta Chen and Chung Hung go up and down completely randomly.
Pair Corralation between Ta Chen and Chung Hung
Assuming the 90 days trading horizon Ta Chen Stainless is expected to generate 0.82 times more return on investment than Chung Hung. However, Ta Chen Stainless is 1.23 times less risky than Chung Hung. It trades about 0.36 of its potential returns per unit of risk. Chung Hung Steel is currently generating about 0.12 per unit of risk. If you would invest 2,975 in Ta Chen Stainless on October 22, 2024 and sell it today you would earn a total of 350.00 from holding Ta Chen Stainless or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ta Chen Stainless vs. Chung Hung Steel
Performance |
| Timeline |
| Ta Chen Stainless |
| Chung Hung Steel |
Ta Chen and Chung Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Chen and Chung Hung
The main advantage of trading using opposite Ta Chen and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Chen position performs unexpectedly, Chung Hung 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 Chung Hung will offset losses from the drop in Chung Hung's long position.| Ta Chen vs. Chung Hung Steel | Ta Chen vs. China Steel Corp | Ta Chen vs. Tung Ho Steel | Ta Chen vs. Yang Ming Marine |
| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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