Correlation Between Cheng Shin and Asia Cement
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Asia Cement 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 Cheng Shin and Asia Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheng Shin Rubber and Asia Cement Corp, you can compare the effects of market volatilities on Cheng Shin and Asia Cement 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 Cheng Shin with a short position of Asia Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Asia Cement.
Diversification Opportunities for Cheng Shin and Asia Cement
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cheng and Asia is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Asia Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Cement Corp and Cheng Shin 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 Cheng Shin Rubber are associated (or correlated) with Asia Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Cement Corp has no effect on the direction of Cheng Shin i.e., Cheng Shin and Asia Cement go up and down completely randomly.
Pair Corralation between Cheng Shin and Asia Cement
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 2.15 times more return on investment than Asia Cement. However, Cheng Shin is 2.15 times more volatile than Asia Cement Corp. It trades about 0.03 of its potential returns per unit of risk. Asia Cement Corp is currently generating about -0.12 per unit of risk. If you would invest 4,935 in Cheng Shin Rubber on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Cheng Shin Rubber or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Asia Cement Corp
Performance |
| Timeline |
| Cheng Shin Rubber |
| Asia Cement Corp |
Cheng Shin and Asia Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Asia Cement
The main advantage of trading using opposite Cheng Shin and Asia Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Asia Cement 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 Asia Cement will offset losses from the drop in Asia Cement's long position.| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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