Correlation Between Clevo and Cheng Uei
Can any of the company-specific risk be diversified away by investing in both Clevo and Cheng Uei 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 Clevo and Cheng Uei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clevo Co and Cheng Uei Precision, you can compare the effects of market volatilities on Clevo and Cheng Uei 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 Clevo with a short position of Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clevo and Cheng Uei.
Diversification Opportunities for Clevo and Cheng Uei
Very good diversification
The 3 months correlation between Clevo and Cheng is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Clevo Co and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision and Clevo 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 Clevo Co are associated (or correlated) with Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Clevo i.e., Clevo and Cheng Uei go up and down completely randomly.
Pair Corralation between Clevo and Cheng Uei
Assuming the 90 days trading horizon Clevo Co is expected to under-perform the Cheng Uei. But the stock apears to be less risky and, when comparing its historical volatility, Clevo Co is 1.4 times less risky than Cheng Uei. The stock trades about -0.06 of its potential returns per unit of risk. The Cheng Uei Precision is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,580 in Cheng Uei Precision on August 28, 2024 and sell it today you would earn a total of 2,200 from holding Cheng Uei Precision or generate 33.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clevo Co vs. Cheng Uei Precision
Performance |
| Timeline |
| Clevo |
| Cheng Uei Precision |
Clevo and Cheng Uei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clevo and Cheng Uei
The main advantage of trading using opposite Clevo and Cheng Uei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clevo position performs unexpectedly, Cheng Uei 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 Cheng Uei will offset losses from the drop in Cheng Uei's long position.The idea behind Clevo Co and Cheng Uei Precision pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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