Correlation Between Federal Corp and Chaintech Technology
Can any of the company-specific risk be diversified away by investing in both Federal Corp and Chaintech Technology 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 Federal Corp and Chaintech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Corp and Chaintech Technology Corp, you can compare the effects of market volatilities on Federal Corp and Chaintech Technology 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 Federal Corp with a short position of Chaintech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Corp and Chaintech Technology.
Diversification Opportunities for Federal Corp and Chaintech Technology
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and Chaintech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Federal Corp and Chaintech Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaintech Technology Corp and Federal Corp 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 Federal Corp are associated (or correlated) with Chaintech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaintech Technology Corp has no effect on the direction of Federal Corp i.e., Federal Corp and Chaintech Technology go up and down completely randomly.
Pair Corralation between Federal Corp and Chaintech Technology
Assuming the 90 days trading horizon Federal Corp is expected to generate 0.46 times more return on investment than Chaintech Technology. However, Federal Corp is 2.17 times less risky than Chaintech Technology. It trades about -0.02 of its potential returns per unit of risk. Chaintech Technology Corp is currently generating about -0.3 per unit of risk. If you would invest 2,185 in Federal Corp on September 3, 2024 and sell it today you would lose (10.00) from holding Federal Corp or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Corp vs. Chaintech Technology Corp
Performance |
| Timeline |
| Federal Corp |
| Chaintech Technology Corp |
Federal Corp and Chaintech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Corp and Chaintech Technology
The main advantage of trading using opposite Federal Corp and Chaintech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Corp position performs unexpectedly, Chaintech Technology 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 Chaintech Technology will offset losses from the drop in Chaintech Technology's long position.| Federal Corp vs. Tainan Spinning Co | Federal Corp vs. Chia Her Industrial | Federal Corp vs. WiseChip Semiconductor | Federal Corp vs. Novatek Microelectronics Corp |
| Chaintech Technology vs. Taiwan Semiconductor Manufacturing | Chaintech Technology vs. Yang Ming Marine | Chaintech Technology vs. ASE Industrial Holding | Chaintech Technology vs. AU Optronics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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