Correlation Between Chaintech Technology and Paiho Shih
Can any of the company-specific risk be diversified away by investing in both Chaintech Technology and Paiho Shih 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 Paiho Shih 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 Paiho Shih Holdings, you can compare the effects of market volatilities on Chaintech Technology and Paiho Shih 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 Paiho Shih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaintech Technology and Paiho Shih.
Diversification Opportunities for Chaintech Technology and Paiho Shih
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chaintech and Paiho is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Chaintech Technology Corp and Paiho Shih Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiho Shih Holdings 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 Paiho Shih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiho Shih Holdings has no effect on the direction of Chaintech Technology i.e., Chaintech Technology and Paiho Shih go up and down completely randomly.
Pair Corralation between Chaintech Technology and Paiho Shih
Assuming the 90 days trading horizon Chaintech Technology Corp is expected to generate 1.4 times more return on investment than Paiho Shih. However, Chaintech Technology is 1.4 times more volatile than Paiho Shih Holdings. It trades about 0.04 of its potential returns per unit of risk. Paiho Shih Holdings is currently generating about 0.02 per unit of risk. If you would invest 2,760 in Chaintech Technology Corp on September 1, 2024 and sell it today you would earn a total of 1,030 from holding Chaintech Technology Corp or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Chaintech Technology Corp vs. Paiho Shih Holdings
Performance |
| Timeline |
| Chaintech Technology Corp |
| Paiho Shih Holdings |
Chaintech Technology and Paiho Shih Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chaintech Technology and Paiho Shih
The main advantage of trading using opposite Chaintech Technology and Paiho Shih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaintech Technology position performs unexpectedly, Paiho Shih 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 Paiho Shih will offset losses from the drop in Paiho Shih's long position.The idea behind Chaintech Technology Corp and Paiho Shih Holdings 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.| Paiho Shih vs. Chaintech Technology Corp | Paiho Shih vs. AVerMedia Technologies | Paiho Shih vs. Avision | Paiho Shih 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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