Correlation Between Cheng Uei and Darfon Electronics
Can any of the company-specific risk be diversified away by investing in both Cheng Uei and Darfon Electronics 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 Darfon Electronics 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 Darfon Electronics Corp, you can compare the effects of market volatilities on Cheng Uei and Darfon Electronics 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 Darfon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Uei and Darfon Electronics.
Diversification Opportunities for Cheng Uei and Darfon Electronics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cheng and Darfon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Uei Precision and Darfon Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darfon Electronics 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 Darfon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darfon Electronics Corp has no effect on the direction of Cheng Uei i.e., Cheng Uei and Darfon Electronics go up and down completely randomly.
Pair Corralation between Cheng Uei and Darfon Electronics
Assuming the 90 days trading horizon Cheng Uei Precision is expected to generate 1.54 times more return on investment than Darfon Electronics. However, Cheng Uei is 1.54 times more volatile than Darfon Electronics Corp. It trades about 0.07 of its potential returns per unit of risk. Darfon Electronics Corp is currently generating about -0.08 per unit of risk. If you would invest 6,160 in Cheng Uei Precision on October 26, 2024 and sell it today you would earn a total of 690.00 from holding Cheng Uei Precision or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Uei Precision vs. Darfon Electronics Corp
Performance |
| Timeline |
| Cheng Uei Precision |
| Darfon Electronics Corp |
Cheng Uei and Darfon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Uei and Darfon Electronics
The main advantage of trading using opposite Cheng Uei and Darfon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Uei position performs unexpectedly, Darfon Electronics 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 Darfon Electronics will offset losses from the drop in Darfon Electronics' long position.| Cheng Uei vs. Inventec Corp | Cheng Uei vs. Compal Electronics | Cheng Uei vs. Ichia Technologies | Cheng Uei vs. Pan International Industrial Corp |
| Darfon Electronics vs. Cheng Uei Precision | Darfon Electronics vs. Acbel Polytech | Darfon Electronics vs. Inventec Corp | Darfon Electronics vs. Clevo 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |