Correlation Between Cheng Shin and President Chain
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and President Chain 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 President Chain 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 President Chain Store, you can compare the effects of market volatilities on Cheng Shin and President Chain 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 President Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and President Chain.
Diversification Opportunities for Cheng Shin and President Chain
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cheng and President is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and President Chain Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Chain Store 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 President Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Chain Store has no effect on the direction of Cheng Shin i.e., Cheng Shin and President Chain go up and down completely randomly.
Pair Corralation between Cheng Shin and President Chain
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 1.95 times more return on investment than President Chain. However, Cheng Shin is 1.95 times more volatile than President Chain Store. It trades about 0.14 of its potential returns per unit of risk. President Chain Store is currently generating about -0.24 per unit of risk. If you would invest 4,635 in Cheng Shin Rubber on August 31, 2024 and sell it today you would earn a total of 405.00 from holding Cheng Shin Rubber or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. President Chain Store
Performance |
| Timeline |
| Cheng Shin Rubber |
| President Chain Store |
Cheng Shin and President Chain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and President Chain
The main advantage of trading using opposite Cheng Shin and President Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, President Chain 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 President Chain will offset losses from the drop in President Chain'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 |
| President Chain vs. Uni President Enterprises Corp | President Chain vs. Formosa Plastics Corp | President Chain vs. Chunghwa Telecom Co | President Chain vs. Fubon Financial Holding |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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