Correlation Between Cheng Shin and USI Corp
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and USI Corp 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 USI Corp 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 USI Corp, you can compare the effects of market volatilities on Cheng Shin and USI Corp 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 USI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and USI Corp.
Diversification Opportunities for Cheng Shin and USI Corp
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cheng and USI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and USI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USI 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 USI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USI Corp has no effect on the direction of Cheng Shin i.e., Cheng Shin and USI Corp go up and down completely randomly.
Pair Corralation between Cheng Shin and USI Corp
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 1.04 times more return on investment than USI Corp. However, Cheng Shin is 1.04 times more volatile than USI Corp. It trades about 0.06 of its potential returns per unit of risk. USI Corp is currently generating about -0.05 per unit of risk. If you would invest 3,410 in Cheng Shin Rubber on September 3, 2024 and sell it today you would earn a total of 1,650 from holding Cheng Shin Rubber or generate 48.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Cheng Shin Rubber vs. USI Corp
Performance |
| Timeline |
| Cheng Shin Rubber |
| USI Corp |
Cheng Shin and USI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and USI Corp
The main advantage of trading using opposite Cheng Shin and USI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, USI Corp 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 USI Corp will offset losses from the drop in USI Corp'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 |
| USI Corp vs. Asia Polymer Corp | USI Corp vs. Taiwan Styrene Monomer | USI Corp vs. UPC Technology Corp | USI Corp vs. China Petrochemical Development |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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