Correlation Between Cheng Shin and Daxin Materials
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Daxin 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 Daxin 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 Daxin Materials Corp, you can compare the effects of market volatilities on Cheng Shin and Daxin 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 Daxin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Daxin Materials.
Diversification Opportunities for Cheng Shin and Daxin Materials
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cheng and Daxin is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Daxin Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daxin Materials Corp 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 Daxin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daxin Materials Corp has no effect on the direction of Cheng Shin i.e., Cheng Shin and Daxin Materials go up and down completely randomly.
Pair Corralation between Cheng Shin and Daxin Materials
Assuming the 90 days trading horizon Cheng Shin is expected to generate 3.19 times less return on investment than Daxin Materials. But when comparing it to its historical volatility, Cheng Shin Rubber is 1.85 times less risky than Daxin Materials. It trades about 0.05 of its potential returns per unit of risk. Daxin Materials Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,940 in Daxin Materials Corp on August 30, 2024 and sell it today you would earn a total of 15,760 from holding Daxin Materials Corp or generate 227.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Daxin Materials Corp
Performance |
| Timeline |
| Cheng Shin Rubber |
| Daxin Materials Corp |
Cheng Shin and Daxin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Daxin Materials
The main advantage of trading using opposite Cheng Shin and Daxin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Daxin 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 Daxin Materials will offset losses from the drop in Daxin 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 |
| Daxin Materials vs. Topco Scientific Co | Daxin Materials vs. Holtek Semiconductor | Daxin Materials vs. Greatek Electronics | Daxin Materials vs. Stark Technology |
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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