Correlation Between Chaintech Technology and Federal Corp
Can any of the company-specific risk be diversified away by investing in both Chaintech Technology and Federal Corp 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 Chaintech Technology and Federal Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chaintech Technology Corp and Federal Corp, you can compare the effects of market volatilities on Chaintech Technology and Federal Corp 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 Chaintech Technology with a short position of Federal Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaintech Technology and Federal Corp.
Diversification Opportunities for Chaintech Technology and Federal Corp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chaintech and Federal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chaintech Technology Corp and Federal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Corp and Chaintech Technology 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 Chaintech Technology Corp are associated (or correlated) with Federal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Corp has no effect on the direction of Chaintech Technology i.e., Chaintech Technology and Federal Corp go up and down completely randomly.
Pair Corralation between Chaintech Technology and Federal Corp
Assuming the 90 days trading horizon Chaintech Technology Corp is expected to under-perform the Federal Corp. In addition to that, Chaintech Technology is 2.22 times more volatile than Federal Corp. It trades about -0.37 of its total potential returns per unit of risk. Federal Corp is currently generating about -0.02 per unit of volatility. If you would invest 2,185 in Federal Corp on September 1, 2024 and sell it today you would lose (10.00) from holding Federal Corp or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chaintech Technology Corp vs. Federal Corp
Performance |
| Timeline |
| Chaintech Technology Corp |
| Federal Corp |
Chaintech Technology and Federal Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chaintech Technology and Federal Corp
The main advantage of trading using opposite Chaintech Technology and Federal Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaintech Technology position performs unexpectedly, Federal Corp 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 Federal Corp will offset losses from the drop in Federal Corp's long position.The idea behind Chaintech Technology Corp and Federal Corp 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.| Federal Corp vs. Chaintech Technology Corp | Federal Corp vs. AVerMedia Technologies | Federal Corp vs. Avision | Federal Corp 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.
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