Correlation Between Avision and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both Avision and Cheng Shin 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 Avision and Cheng Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avision and Cheng Shin Rubber, you can compare the effects of market volatilities on Avision and Cheng Shin 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 Avision with a short position of Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avision and Cheng Shin.
Diversification Opportunities for Avision and Cheng Shin
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avision and Cheng is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Avision and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber and Avision 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 Avision are associated (or correlated) with Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of Avision i.e., Avision and Cheng Shin go up and down completely randomly.
Pair Corralation between Avision and Cheng Shin
Assuming the 90 days trading horizon Avision is expected to under-perform the Cheng Shin. In addition to that, Avision is 1.16 times more volatile than Cheng Shin Rubber. It trades about -0.08 of its total potential returns per unit of risk. Cheng Shin Rubber is currently generating about 0.06 per unit of volatility. If you would invest 3,460 in Cheng Shin Rubber on September 2, 2024 and sell it today you would earn a total of 1,600 from holding Cheng Shin Rubber or generate 46.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avision vs. Cheng Shin Rubber
Performance |
| Timeline |
| Avision |
| Cheng Shin Rubber |
Avision and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avision and Cheng Shin
The main advantage of trading using opposite Avision and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avision position performs unexpectedly, Cheng Shin 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 Shin will offset losses from the drop in Cheng Shin's long position.The idea behind Avision and Cheng Shin Rubber 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.| Cheng Shin vs. Chaintech Technology Corp | Cheng Shin vs. Avision | Cheng Shin vs. Clevo Co | Cheng Shin vs. Elitegroup Computer Systems |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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