Correlation Between Ability Enterprise and Cheng Fwa
Can any of the company-specific risk be diversified away by investing in both Ability Enterprise and Cheng Fwa 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 Ability Enterprise and Cheng Fwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ability Enterprise Co and Cheng Fwa Industrial, you can compare the effects of market volatilities on Ability Enterprise and Cheng Fwa 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 Ability Enterprise with a short position of Cheng Fwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ability Enterprise and Cheng Fwa.
Diversification Opportunities for Ability Enterprise and Cheng Fwa
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ability and Cheng is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ability Enterprise Co and Cheng Fwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Fwa Industrial and Ability Enterprise 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 Ability Enterprise Co are associated (or correlated) with Cheng Fwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Fwa Industrial has no effect on the direction of Ability Enterprise i.e., Ability Enterprise and Cheng Fwa go up and down completely randomly.
Pair Corralation between Ability Enterprise and Cheng Fwa
Assuming the 90 days trading horizon Ability Enterprise Co is expected to generate 0.86 times more return on investment than Cheng Fwa. However, Ability Enterprise Co is 1.16 times less risky than Cheng Fwa. It trades about 0.09 of its potential returns per unit of risk. Cheng Fwa Industrial is currently generating about 0.06 per unit of risk. If you would invest 2,610 in Ability Enterprise Co on September 4, 2024 and sell it today you would earn a total of 2,010 from holding Ability Enterprise Co or generate 77.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ability Enterprise Co vs. Cheng Fwa Industrial
Performance |
| Timeline |
| Ability Enterprise |
| Cheng Fwa Industrial |
Ability Enterprise and Cheng Fwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ability Enterprise and Cheng Fwa
The main advantage of trading using opposite Ability Enterprise and Cheng Fwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ability Enterprise position performs unexpectedly, Cheng Fwa 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 Fwa will offset losses from the drop in Cheng Fwa's long position.| Ability Enterprise vs. Pacific Construction Co | Ability Enterprise vs. Highwealth Construction Corp | Ability Enterprise vs. Tehmag Foods | Ability Enterprise vs. Great China Metal |
| Cheng Fwa vs. Nankang Rubber Tire | Cheng Fwa vs. Newretail Co | Cheng Fwa vs. Cheng Mei Materials | Cheng Fwa vs. Tradetool Auto Co |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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