Correlation Between Cheng Shin and Kung Long
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Kung Long 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 Kung Long 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 Kung Long Batteries, you can compare the effects of market volatilities on Cheng Shin and Kung Long 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 Kung Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Kung Long.
Diversification Opportunities for Cheng Shin and Kung Long
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cheng and Kung is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Kung Long Batteries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kung Long Batteries 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 Kung Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kung Long Batteries has no effect on the direction of Cheng Shin i.e., Cheng Shin and Kung Long go up and down completely randomly.
Pair Corralation between Cheng Shin and Kung Long
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to under-perform the Kung Long. In addition to that, Cheng Shin is 1.42 times more volatile than Kung Long Batteries. It trades about -0.11 of its total potential returns per unit of risk. Kung Long Batteries is currently generating about -0.12 per unit of volatility. If you would invest 15,450 in Kung Long Batteries on October 26, 2024 and sell it today you would lose (300.00) from holding Kung Long Batteries or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Kung Long Batteries
Performance |
| Timeline |
| Cheng Shin Rubber |
| Kung Long Batteries |
Cheng Shin and Kung Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Kung Long
The main advantage of trading using opposite Cheng Shin and Kung Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Kung Long 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 Kung Long will offset losses from the drop in Kung Long'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 |
| Kung Long vs. Grape King Bio | Kung Long vs. TTET Union Corp | Kung Long vs. Zeng Hsing Industrial | Kung Long vs. Basso Industry 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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