Correlation Between Cheng Shin and Hotai
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Hotai 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 Hotai 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 Hotai Motor Co, you can compare the effects of market volatilities on Cheng Shin and Hotai 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 Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Hotai.
Diversification Opportunities for Cheng Shin and Hotai
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cheng and Hotai is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor 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 Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of Cheng Shin i.e., Cheng Shin and Hotai go up and down completely randomly.
Pair Corralation between Cheng Shin and Hotai
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to under-perform the Hotai. In addition to that, Cheng Shin is 1.28 times more volatile than Hotai Motor Co. It trades about -0.05 of its total potential returns per unit of risk. Hotai Motor Co is currently generating about 0.01 per unit of volatility. If you would invest 61,000 in Hotai Motor Co on September 2, 2024 and sell it today you would earn a total of 400.00 from holding Hotai Motor Co or generate 0.66% 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. Hotai Motor Co
Performance |
| Timeline |
| Cheng Shin Rubber |
| Hotai Motor |
Cheng Shin and Hotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Hotai
The main advantage of trading using opposite Cheng Shin and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai's long position.| Cheng Shin vs. Chaintech Technology Corp | Cheng Shin vs. Avision | Cheng Shin vs. Clevo Co | Cheng Shin vs. Elitegroup Computer Systems |
| Hotai vs. President Chain Store | Hotai vs. Formosa Petrochemical Corp | Hotai vs. Cheng Shin Rubber | Hotai vs. Formosa Chemicals Fibre |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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