Correlation Between Chaintech Technology and Kenda Rubber
Can any of the company-specific risk be diversified away by investing in both Chaintech Technology and Kenda Rubber 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 Kenda Rubber 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 Kenda Rubber Industrial, you can compare the effects of market volatilities on Chaintech Technology and Kenda Rubber 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 Kenda Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaintech Technology and Kenda Rubber.
Diversification Opportunities for Chaintech Technology and Kenda Rubber
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chaintech and Kenda is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Chaintech Technology Corp and Kenda Rubber Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenda Rubber Industrial 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 Kenda Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenda Rubber Industrial has no effect on the direction of Chaintech Technology i.e., Chaintech Technology and Kenda Rubber go up and down completely randomly.
Pair Corralation between Chaintech Technology and Kenda Rubber
Assuming the 90 days trading horizon Chaintech Technology Corp is expected to generate 1.95 times more return on investment than Kenda Rubber. However, Chaintech Technology is 1.95 times more volatile than Kenda Rubber Industrial. It trades about 0.3 of its potential returns per unit of risk. Kenda Rubber Industrial is currently generating about 0.42 per unit of risk. If you would invest 3,320 in Chaintech Technology Corp on November 29, 2024 and sell it today you would earn a total of 365.00 from holding Chaintech Technology Corp or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Chaintech Technology Corp vs. Kenda Rubber Industrial
Performance |
| Timeline |
| Chaintech Technology Corp |
| Kenda Rubber Industrial |
Chaintech Technology and Kenda Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chaintech Technology and Kenda Rubber
The main advantage of trading using opposite Chaintech Technology and Kenda Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaintech Technology position performs unexpectedly, Kenda Rubber 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 Kenda Rubber will offset losses from the drop in Kenda Rubber's long position.| Chaintech Technology vs. Biostar Microtech International | Chaintech Technology vs. Elitegroup Computer Systems | Chaintech Technology vs. Shuttle | Chaintech Technology vs. Gigabyte Technology Co |
| Kenda Rubber vs. Cheng Shin Rubber | Kenda Rubber vs. Nankang Rubber Tire | Kenda Rubber vs. Federal Corp | Kenda Rubber vs. Yulon Motor 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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