Correlation Between Hung Sheng and Chunghwa Chemical
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Chunghwa Chemical 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 Hung Sheng and Chunghwa Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hung Sheng Construction and Chunghwa Chemical Synthesis, you can compare the effects of market volatilities on Hung Sheng and Chunghwa Chemical 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 Hung Sheng with a short position of Chunghwa Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Chunghwa Chemical.
Diversification Opportunities for Hung Sheng and Chunghwa Chemical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hung and Chunghwa is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Chunghwa Chemical Synthesis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Chemical and Hung Sheng 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 Hung Sheng Construction are associated (or correlated) with Chunghwa Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Chemical has no effect on the direction of Hung Sheng i.e., Hung Sheng and Chunghwa Chemical go up and down completely randomly.
Pair Corralation between Hung Sheng and Chunghwa Chemical
Assuming the 90 days trading horizon Hung Sheng Construction is expected to under-perform the Chunghwa Chemical. In addition to that, Hung Sheng is 1.27 times more volatile than Chunghwa Chemical Synthesis. It trades about -0.18 of its total potential returns per unit of risk. Chunghwa Chemical Synthesis is currently generating about 0.0 per unit of volatility. If you would invest 3,315 in Chunghwa Chemical Synthesis on October 25, 2024 and sell it today you would lose (10.00) from holding Chunghwa Chemical Synthesis or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Chunghwa Chemical Synthesis
Performance |
| Timeline |
| Hung Sheng Construction |
| Chunghwa Chemical |
Hung Sheng and Chunghwa Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Chunghwa Chemical
The main advantage of trading using opposite Hung Sheng and Chunghwa Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Chunghwa Chemical 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 Chemical will offset losses from the drop in Chunghwa Chemical's long position.| Hung Sheng vs. Chainqui Construction Development | Hung Sheng vs. Kee Tai Properties | Hung Sheng vs. BES Engineering Co | Hung Sheng vs. Zinwell |
| Chunghwa Chemical vs. Sinphar Pharmaceutical Co | Chunghwa Chemical vs. Abnova Taiwan Corp | Chunghwa Chemical vs. YungShin Global Holding | Chunghwa Chemical vs. Phytohealth 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |