Correlation Between Cheng Shin and Eternal Materials
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Eternal Materials 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 Eternal Materials 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 Eternal Materials Co, you can compare the effects of market volatilities on Cheng Shin and Eternal Materials 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 Eternal Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Eternal Materials.
Diversification Opportunities for Cheng Shin and Eternal Materials
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cheng and Eternal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Eternal Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Materials 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 Eternal Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Materials has no effect on the direction of Cheng Shin i.e., Cheng Shin and Eternal Materials go up and down completely randomly.
Pair Corralation between Cheng Shin and Eternal Materials
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 1.3 times more return on investment than Eternal Materials. However, Cheng Shin is 1.3 times more volatile than Eternal Materials Co. It trades about 0.06 of its potential returns per unit of risk. Eternal Materials Co is currently generating about -0.01 per unit of risk. If you would invest 3,460 in Cheng Shin Rubber on August 26, 2024 and sell it today you would earn a total of 1,680 from holding Cheng Shin Rubber or generate 48.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Eternal Materials Co
Performance |
| Timeline |
| Cheng Shin Rubber |
| Eternal Materials |
Cheng Shin and Eternal Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Eternal Materials
The main advantage of trading using opposite Cheng Shin and Eternal Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Eternal Materials 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 Eternal Materials will offset losses from the drop in Eternal Materials' 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 |
| Eternal Materials vs. Cheng Shin Rubber | Eternal Materials vs. Taiwan Cement Corp | Eternal Materials vs. China Steel Chemical | Eternal Materials vs. Yulon Motor Co |
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.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |