Correlation Between Cheng Uei and D Link
Can any of the company-specific risk be diversified away by investing in both Cheng Uei and D Link 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 Uei and D Link into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheng Uei Precision and D Link Corp, you can compare the effects of market volatilities on Cheng Uei and D Link 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 Uei with a short position of D Link. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Uei and D Link.
Diversification Opportunities for Cheng Uei and D Link
Poor diversification
The 3 months correlation between Cheng and 2332 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Uei Precision and D Link Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D Link Corp and Cheng Uei 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 Uei Precision are associated (or correlated) with D Link. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D Link Corp has no effect on the direction of Cheng Uei i.e., Cheng Uei and D Link go up and down completely randomly.
Pair Corralation between Cheng Uei and D Link
Assuming the 90 days trading horizon Cheng Uei Precision is expected to generate 1.32 times more return on investment than D Link. However, Cheng Uei is 1.32 times more volatile than D Link Corp. It trades about 0.09 of its potential returns per unit of risk. D Link Corp is currently generating about 0.02 per unit of risk. If you would invest 3,873 in Cheng Uei Precision on August 31, 2024 and sell it today you would earn a total of 4,087 from holding Cheng Uei Precision or generate 105.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Cheng Uei Precision vs. D Link Corp
Performance |
| Timeline |
| Cheng Uei Precision |
| D Link Corp |
Cheng Uei and D Link Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Uei and D Link
The main advantage of trading using opposite Cheng Uei and D Link positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Uei position performs unexpectedly, D Link 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 D Link will offset losses from the drop in D Link's long position.| Cheng Uei vs. Inventec Corp | Cheng Uei vs. Compal Electronics | Cheng Uei vs. Ichia Technologies | Cheng Uei vs. Pan International Industrial Corp |
| D Link vs. Accton Technology Corp | D Link vs. Compal Electronics | D Link vs. Qisda Corp | D Link vs. Macronix International 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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