Correlation Between Advantech and Chunghwa Precision
Can any of the company-specific risk be diversified away by investing in both Advantech and Chunghwa Precision 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 Advantech and Chunghwa Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantech Co and Chunghwa Precision Test, you can compare the effects of market volatilities on Advantech and Chunghwa Precision 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 Advantech with a short position of Chunghwa Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Chunghwa Precision.
Diversification Opportunities for Advantech and Chunghwa Precision
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advantech and Chunghwa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Chunghwa Precision Test in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Precision Test and Advantech 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 Advantech Co are associated (or correlated) with Chunghwa Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Precision Test has no effect on the direction of Advantech i.e., Advantech and Chunghwa Precision go up and down completely randomly.
Pair Corralation between Advantech and Chunghwa Precision
Assuming the 90 days trading horizon Advantech Co is expected to generate 0.64 times more return on investment than Chunghwa Precision. However, Advantech Co is 1.57 times less risky than Chunghwa Precision. It trades about 0.18 of its potential returns per unit of risk. Chunghwa Precision Test is currently generating about -0.12 per unit of risk. If you would invest 35,150 in Advantech Co on October 26, 2024 and sell it today you would earn a total of 2,750 from holding Advantech Co or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantech Co vs. Chunghwa Precision Test
Performance |
| Timeline |
| Advantech |
| Chunghwa Precision Test |
Advantech and Chunghwa Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantech and Chunghwa Precision
The main advantage of trading using opposite Advantech and Chunghwa Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantech position performs unexpectedly, Chunghwa Precision 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 Chunghwa Precision will offset losses from the drop in Chunghwa Precision's long position.| Advantech vs. Delta Electronics | Advantech vs. Quanta Computer | Advantech vs. Realtek Semiconductor Corp | Advantech vs. President Chain Store |
| Chunghwa Precision vs. Advantech Co | Chunghwa Precision vs. IEI Integration Corp | Chunghwa Precision vs. Flytech Technology Co | Chunghwa Precision vs. Ennoconn Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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