Correlation Between Cheng Shin and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Hwa Fong 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 Hwa Fong 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 Hwa Fong Rubber, you can compare the effects of market volatilities on Cheng Shin and Hwa Fong 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 Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Hwa Fong.
Diversification Opportunities for Cheng Shin and Hwa Fong
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cheng and Hwa is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Hwa Fong Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwa Fong Rubber 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 Hwa Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwa Fong Rubber has no effect on the direction of Cheng Shin i.e., Cheng Shin and Hwa Fong go up and down completely randomly.
Pair Corralation between Cheng Shin and Hwa Fong
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 2.14 times more return on investment than Hwa Fong. However, Cheng Shin is 2.14 times more volatile than Hwa Fong Rubber. It trades about 0.0 of its potential returns per unit of risk. Hwa Fong Rubber is currently generating about -0.06 per unit of risk. If you would invest 4,970 in Cheng Shin Rubber on October 29, 2024 and sell it today you would lose (5.00) from holding Cheng Shin Rubber or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Hwa Fong Rubber
Performance |
| Timeline |
| Cheng Shin Rubber |
| Hwa Fong Rubber |
Cheng Shin and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Hwa Fong
The main advantage of trading using opposite Cheng Shin and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Hwa Fong 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 Hwa Fong will offset losses from the drop in Hwa Fong'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 |
| Hwa Fong vs. Kenda Rubber Industrial | Hwa Fong vs. Cheng Shin Rubber | Hwa Fong vs. Federal Corp | Hwa Fong vs. Nankang Rubber Tire |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |