Correlation Between Cheng Shin and Yem Chio
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Yem Chio 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 Yem Chio 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 Yem Chio Co, you can compare the effects of market volatilities on Cheng Shin and Yem Chio 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 Yem Chio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Yem Chio.
Diversification Opportunities for Cheng Shin and Yem Chio
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cheng and Yem is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Yem Chio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yem Chio 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 Yem Chio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yem Chio has no effect on the direction of Cheng Shin i.e., Cheng Shin and Yem Chio go up and down completely randomly.
Pair Corralation between Cheng Shin and Yem Chio
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 3.2 times more return on investment than Yem Chio. However, Cheng Shin is 3.2 times more volatile than Yem Chio Co. It trades about 0.14 of its potential returns per unit of risk. Yem Chio Co is currently generating about -0.08 per unit of risk. If you would invest 4,635 in Cheng Shin Rubber on September 1, 2024 and sell it today you would earn a total of 425.00 from holding Cheng Shin Rubber or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Yem Chio Co
Performance |
| Timeline |
| Cheng Shin Rubber |
| Yem Chio |
Cheng Shin and Yem Chio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Yem Chio
The main advantage of trading using opposite Cheng Shin and Yem Chio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Yem Chio 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 Yem Chio will offset losses from the drop in Yem Chio'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 |
| Yem Chio vs. BES Engineering Co | Yem Chio vs. Continental Holdings Corp | Yem Chio vs. Kee Tai Properties | Yem Chio vs. Hung Sheng Construction |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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